Problem
1. From the perspective of a monetarist, what is the only really important effect that a revaluation has on a surplus country? How does this affect the surplus? What must the central bank do in order to avoid interfering with the intended effects of the revaluation?
2. "One problem with achieving balance-of-payments equilibrium through devaluation is that the therapy may be addictive. That is, additional devaluations become necessary." Why might this be true? How can a country avoid such an outcome?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.