If Real Interest Rates in the United States Are Higher

question 64

Multiple Choice

If real interest rates in the United States are higher than those of our trading partners, what will tend to happen to the foreign exchange value of the dollar and the U.S. current account deficit or surplus?

• A) The dollar will depreciate; the current account will move toward a deficit.
• B) The dollar will depreciate; the current account will move toward a surplus.
• C) The dollar will appreciate; the current account will move toward a deficit.
• D) The dollar will appreciate; the current account will move toward a surplus.

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Definitions:

Diversified Market

Two or more customer segments with different needs and problems that bear no relationship to each other.

Customer Segments

Distinct groups of people who share similar needs or characteristics targeted by a business's products or services.

Segmented Market

A market divided into groups according to customers’ different needs and problems.

Mass Market

Refers to the large, general group of consumers that products are aimed at, not tailored to specific niches.