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.

---

Definitions:

World Equity Benchmark Shares

Exchange-traded funds that aim to provide investment results that, before fees and expenses, correspond to the price and yield performance of specific international equity indexes.

ADRs

American Depositary Receipts, a way for investors to own shares in foreign companies, where the shares are held by a US financial institution overseas and traded on American exchanges.

WEBS

Exchange-traded funds that track international stock market indices, allowing investors to diversify their portfolios globally.

Derivative Securities

Financial instruments whose value is derived from the value of other, underlying assets.