The key link between the twin deficits involves:

A) higher interest rates and a stronger dollar.
B) lower interest rates and a stronger dollar.
C) higher interest rates and a weaker dollar.
D) lower interest rates and larger trade deficits
E) higher interest rates leading to more exports.

Question

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Final Answer : A, Explanation :  The twin deficits refer to a country's current account (or trade) deficit and its fiscal deficit. The link between them often involves higher interest rates, which can attract foreign capital, leading to a stronger dollar. This makes imports cheaper and exports more expensive, potentially widening the trade deficit.

The key link between the twin deficits involves:

A) higher interest rates and a stronger dollar.
B) lower interest rates and a stronger dollar.
C) higher interest rates and a weaker dollar.
D) lower interest rates and larger trade deficits
E) higher interest rates leading to more exports.

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Learning Objectives

Learning Objectives

Related questions

The key link between the twin deficits involves:A) higher interest rates and a stronger dollar.B) lower interest rates and a stronger dollar.C) higher interest rates and a weaker dollar.D) lower interest rates and larger trade deficitsE) higher interest rates leading to more exports.

Definitions

Learning Objectives

Learning Objectives

Related questions

The key link between the twin deficits involves:

A) higher interest rates and a stronger dollar.
B) lower interest rates and a stronger dollar.
C) higher interest rates and a weaker dollar.
D) lower interest rates and larger trade deficits
E) higher interest rates leading to more exports.