Author Question: What impact might an increase in the budget deficit have on interest rates and exchange rates? A) ... (Read 109 times)

ap345 · **on:** Jun 29, 2018

What impact might an increase in the budget deficit have on interest rates and exchange rates?

A) Interest rates decrease and exchange rates increase.
B) Interest rates increase and exchange rates decrease.
C) Interest rates and exchange rates increase.
D) Interest rates and exchange rates decrease.

Question 2

How might a budget deficit affect the balance of trade?

A) A budget deficit reduces interest rates, which reduces exchange rates and reduces the balance of trade.
B) A budget deficit raises interest rates, which raises exchange rates and reduces the balance of trade.
C) A budget deficit raises interest rates, which raises exchange rates and increases the balance of trade.
D) A budget deficit reduces interest rates, which raises exchange rates and reduces the balance of trade.