It Signals That The Interest Rate Is About To Fall

a) it signals that the interest rate is about to fall, attracting capital inflowsb) other things equal, smaller current account deficits mean lower importsc) other things equal, it means a balance of payments surplus which bids up the value of the dollard) the smaller current account deficit means the value of the dollar will continue to fall, albeit more slowly, increasing exports27. “The report concludes that the recent strength in U.S. investment has been financed by domestic investors redirecting funds from foreign capital markets to U.S. capital markets. Thus, increased demand for U.S. dollars isn’t the reason for the strength of the U.S. dollar, but rather a decreased U.S. demand for foreign currencies.” U.S. investors redirected their funds because ofa) an appeal to patriotism b) a current account surplusc) a rise in the U.S. interest rate d) a balance of payments surplus28. “If domestic savings increases and domestic investment decreases, it is possible that a budget deficit may not lead to a deficit on current account.” This could happen because under these circumstancesa) tax receipts would increase b) the budget deficit would disappearc) the interest rate would fall, creating a balance of payments deficitd) the interest rate would rise, causing a balance of payments surplus

Originally posted 2018-07-10 21:53:17. Republished by Blog Post Promoter