Which of the Following Is the Chief Link Between the U.S.federal

question 17

Multiple Choice

Which of the following is the chief link between the U.S.federal budget deficit and the U.S.trade deficit during the 1980s?

• A)High U.S.interest rates led to a rise in the relative value of the dollar.
• B)High U.S.interest rates led to a decrease in the relative value of the dollar.
• C)Higher interest rates resulted in the crowding out of some private investment,reducing the stimulating effect of the government's deficit.
• D)The U.S.price level declined relative to that of foreign countries,causing U.S.interest rates to fall.
• E)The additional fiscal stimulus provided by a higher government deficit encouraged some firms to invest more.

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Definitions:

Initial Direct Costs

The expenditures that a company can directly attribute to acquiring a new lease or originating a loan.

Operating Lease

A lease agreement that allows for the use of an asset but does not convey rights similar to ownership of the asset.

Prepaid Asset

Costs that are paid for upfront and listed as assets prior to their utilization or consumption.

Interest Rate Implicit

The interest rate in a lease that, when applied to the lease payments, discounts them to equal the fair value of the leased asset.