What Were the Chief Links Between the U

question 113

Multiple Choice

What were the chief links 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)U.S.interest rates fell relative to foreign rates and thus the dollar appreciated.
• D)The U.S.price level declined relative to that of foreign countries,causing U.S.interest rates to fall.
• E)The recessions of 1980 and 1981-1982 were the key links; recession widened the budget deficit and this caused the U.S.price level to fall,enabling foreigners to invest in U.S.assets.

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Definitions:

Ratchet

A mechanical device consisting of a wheel or bar with teeth, allowing movement in one direction while preventing movement in the opposite direction, or colloquially, a situation or process that is perceived to be deteriorating or declining.

Forceps

A handheld, hinged instrument used in surgical procedures for grasping, holding firmly, or extracting something within the body.

Clamping

The process of holding or securing objects tightly together using a device to prevent movement or separation.

Grasping

The action of seizing or holding firmly, often used to describe the development of motor skills in infants or for understanding concepts.