Which of the Following Is One of the Reasons for the Rapid

question 42

Multiple Choice

Which of the following is one of the reasons for the rapid rise in the value of the dollar between 1980 and 1985 despite a large trade deficit?

• A)Political stability in all other parts of the world
• B)Heavy capital outflows from the United States
• C)Low real interest rates in the United States
• D)Slow economic growth in the developed countries of Europe
• E)Increasing exports against decreasing imports in the United States

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Definitions:

Discretionary Fiscal Policy

Government policy involving deliberate manipulation of government spending and taxes to influence the economy based on current economic conditions.

Aggregate Demand

Aggregate demand is the total demand for all goods and services within an economy at a given overall price level and in a given time period.

Multiplier Effect

The phenomenon where an initial change in spending leads to a greater overall change in income and output in the economy.

Business Activity

Collective commercial, industrial, or professional operations within an economy, indicative of its overall economic health.