Some nations that fix their exchange rates make their currency more expensive for foreigners (an overvalued currency), while others make their currency artificially cheap to foreigners (an undervalued currency).
a. Why would a country want an overvalued currency? How, specifically, would the country benefit? Would the policy cause harm to anyone in the country? Explain briefly.
b. Why would a country want an undervalued currency? How, specifically, would the country benefit? Would the policy cause harm to anyone in the country? Explain briefly.