If Real Interest Rates in the United States Are Higher

question 64

Multiple Choice

If real interest rates in the United States are higher than those of our trading partners, what will tend to happen to the foreign exchange value of the dollar and the U.S. current account deficit or surplus?

• A) The dollar will depreciate; the current account will move toward a deficit.
• B) The dollar will depreciate; the current account will move toward a surplus.
• C) The dollar will appreciate; the current account will move toward a deficit.
• D) The dollar will appreciate; the current account will move toward a surplus.

---

Definitions:

Cost Formula

An equation used to calculate the total cost of production, involving fixed and variable components.

Vehicle Operating Cost

refers to the expenses associated with using a vehicle, including fuel, maintenance, insurance, and depreciation.

Cost Formula

An equation used to determine the total cost of production, incorporating variable and fixed costs.

Wages and Salaries

Compensation paid to employees for their services, which can be based on time spent or tasks performed.