GENERAL KNOWLEDGE

Detailed explanation-1: -To control the deficit, a country can take the following steps: Attract more foreign investment. Increase exports. Decrease unnecessary imports.

Detailed explanation-2: -Government can reduce substantial current account deficit by increasing exports or by decreasing imports which can be through import restrictions, quotas, or duties or by subsidizing exports. Manipulating of exchange rate for cheaper exports tends to increase balance of payments through devaluing of domestic currency.

Detailed explanation-3: -The current account deficit is an important signal of competitiveness and the level of imports and exports. A large current account deficit usually implies some kind of disbalance in the economy, which needs correcting with the depreciation in the exchange rate and/or improved competitiveness over time.

Detailed explanation-4: -> Depreciating currency value Currency devaluation is a deliberate downward adjustment of the value of a country’s currency against another currency.