In a small open economy, if the government adopts a policy that lowers imports, then that policy raises the real exchange rate and does not change net exports.
According to supply and demand economics, prices increase and the value of the currency increases when demand is high. On the other hand, if a nation imports more than it exports, there will be less of a demand for its currency, which will result in lower pricing. Currency experiences depreciation, or value loss.
That is why country adopt policy that lower import so that it will raise the real exchange rate. if country not adopt the policy of lower import In comparison to other currencies, the value of the nation's currency will declines.
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