One Reason for the Rapid Rise in the Value of the Dollar

question 70

Multiple Choice

One reason for the rapid rise in the value of the dollar between 1980 and 1985 despite a large trade deficit was due to

• A) political stability in all other parts of the world.
• B) heavy capital outflows from the United States.
• C) low real interest rates in the United States.
• D) slow economic growth in the developed countries of Europe.
• E) increasing exports against decreasing imports in the United States.

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Definitions:

Cash Payment

A transaction in which money (in the form of cash) is given by one party to another in exchange for goods, services, or to settle a debt.

Signaling Effect

The phenomenon where actions by a company provide clues or signals to the market about its potential performance or financial health.

Dividend Policy

A company's stance on distributing earnings back to shareholders through dividends, including considerations on the timing and amount of those dividends.

Stock Price

The cost of purchasing a share of a company in the stock market, reflecting the company's current market value.