Advantage of increasing foreign exchange reserves

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Reference no: EM133616582

Trade surpluses have the advantage of increasing foreign exchange reserves, which can give stability during economic downturns.

Disadvantage: Rising exchange rates might reduce export competitiveness. The Benefits of a Trade Deficit: Advantage: Access to a wide range of goods and services that are not produced in the country.

Disadvantage: Foreign debt accumulation, which might lead to economic instability. Policy Measures to Reduce Foreign Debt: Pursue fiscal discipline by managing budget deficits and enforcing a strict monetary policy to limit excessive borrowing.

Reference no: EM133616582

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