The crowding-out effect indicates that an increase in a fiscal deficit financed by borrowing will increase interest rates and thereby crowd out some domestic investment spending.
a. True
b. False
Indicate whether the statement is true or false
Question 2
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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