Answer :
In order to decrease the value of its imports without increasing the amount of money spent in trade, a country would need to address the issue of its currency's exchange rate in relation to other countries. Here's how different scenarios would impact this:
1. If the country changes its trade policy to create a flexible exchange rate, it could allow its currency to fluctuate based on market forces. If the value of the country's currency increases relative to others, it would make imports cheaper in terms of the country's currency, thus decreasing the value of imports without spending more money.
2. On the other hand, if the country opts for a fixed exchange rate in its trade policy, it would need to intervene in the foreign exchange market to maintain the set rate. If the value of the country's currency decreases relative to others, it would have a similar effect of making imports more expensive in the country's currency, achieving the goal of decreasing the value of imports without increasing spending.
In summary, whether through a flexible exchange rate or a fixed exchange rate policy, a country can manage the value of its imports without raising trade costs by adjusting its currency's value relative to other countries.
