The Assumption That the Fed Would Continue to Increase Interest

question 3

Multiple Choice

The assumption that the Fed would continue to increase interest rates caused the dollar to appreciate. For the U.S. economy, an appreciating dollar reflects

• A)a rise in exchange rates, decreasing net exports and GDP.
• B)a rise in exchange rates, increasing net exports and GDP.
• C)a fall in exchange rates, decreasing net exports and GDP.
• D)a fall in exchange rates, increasing net exports and GDP.

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Definitions:

Liabilities

Financial obligations or debts that a company owes to others, which must be settled over time through the transfer of economic benefits.

Current Liabilities

Obligations or debts a company is expected to settle within one fiscal year or its operating cycle, whichever is longer, including accounts payable and short-term loans.

Debt Guarantees

Debt guarantees refer to commitments made to pay back a loan or debt if the original borrower fails to do so, often provided by a third party.

Contingent Liabilities

Liabilities that may occur depending on the outcome of a future event.