How Might a U

question 102

Multiple Choice

How might a U.S.federal budget surplus affect the balance of trade? (Assume exchange rates are stated in terms of foreign currency per U.S.dollar.)

• A)A federal budget surplus raises interest rates,which raises exchange rates,and increases the balance of trade.
• B)A federal budget surplus raises interest rates,which raises exchange rates,and reduces the balance of trade.
• C)A federal budget surplus reduces interest rates,which raises exchange rates,and reduces the balance of trade.
• D)A federal budget surplus reduces interest rates,which reduces exchange rates and increases the balance of trade.

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Definitions:

Financial Industry

A sector of the economy that includes businesses and institutions that provide financial services, such as banking, investment, and insurance.

Stimulus

Economic measures taken by the government to encourage growth or prevent economic slowdown, often through spending or tax cuts.

Disinflation

A reduction in the rate of inflation; a slowdown in the rate at which prices increase.

1960s

A decade of significant cultural, political, and technological change, marked by movements for civil rights, space exploration, and the emergence of counterculture.