(a) If country C has a large commercial deficit (Imports>Exports) and wants to use MONETARY policy to reduce this deficit what does the country do? (b) What is the impact of this on foreign exchange? If country C is a highly dollarized economy, how does your answer from (a) and (b) change?

Answer rating: 100% (QA)

a If country C has a large commercial deficit Imports Exports and wants to use monetary policy to reduce this deficit it can pursue contractionary mon... View the full answer