A decrease in U.S. federal government budget deficits that lowers U.S. interest rates relative to the rest of the world should
A) decrease net exports.
B) increase foreign portfolio investment.
C) lead to a current account surplus.
D) lower the trade balance.
E) cause the dollar to appreciate.
B
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If net exports are negative, then
a. net capital outflow is positive (indicating an inflow of capital), so foreign assets bought by Americans are greater than American assets bought by foreigners. b. net capital outflow is positive (indicating an inflow of capital), so American assets bought by foreigners are greater than foreign assets bought by Americans. c. net capital outflow is negative (indicating an outflow of capital), so foreign assets bought by Americans are greater than American assets bought by foreigners. d. net capital outflow is negative (indicating an outflow of capital), so American assets bought by foreigners are greater than foreign assets bought by Americans.
Stagflation refers to a situation in which the economy is experiencing:
A. high economic growth and high inflation. B. low economic growth and high inflation. C. high economic growth and low inflation. D. low economic growth and low inflation.