How does the government’s decision to run a budget surplus affect the market for foreign-currency exchange?
Posted April 18th, 2010 by admin 2 Comments »
John asked:
Assuming the world interest rate remains the same at 3%, the increase in the budget surplus will lead to:
Assuming the world interest rate remains the same at 3%, the increase in the budget surplus will lead to:
I. An increase in the demand for dollars
II. An increase in the supply of dollars
III. An increase in the quantity of net exports
IV. Appreciation of the dollar
A. I and IV only
B. I, II, III, and IV
C. II, III, and IV only
D. II and III only