One way of correcting the balance of payments problem of ...
One way of correcting the balance of payments problem of a country is to
Introduce import-promotion measures
Buy investments abroad
Devalue the currency
De-emphasize import-substitution industries
Correct answer is C
Devaluating a country's currency is one of the ways used in correcting a balance of payment problem. The term Devaluation means a reduction in the official rate at which one currency is exchanged for another. It is done to make export attractive by making imports expensive.
When a currency is devalued, its value falls against foreign currencies, when traders realize that a bulk of the local currency will exchange for very little of the foreign currency, they will prefer to export and get paid in foreign currencies with greater value, than import into the country at very high exchange rates.
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