The impact of cutting government spending to reduce deficit on interest rate, capital, and real exchange rate.

Question

If there is a decrease in the desire of foreigners to purchase goods and services from the United States and a lower desire to invest in U.S. banks and businesses, then how would this affect the U.S. foreign exchange market? A. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would depreciate. B. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would appreciate. C. The equilibrium quantity of foreign currency would increase and the U.S. dollar would depreciate. D. The equilibrium quantity of foreign currency would increase and the U.S. dollar would appreciate.

Answer 1

Question

Chapter 19, Problem 3CQQ

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The impact of cutting government spending to reduce deficit on interest rate, capital, and real exchange rate.

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