Question Details

These policies increased the value of the dollar because 



1. A strong dollar is a mixed blessing. It ________ the price of imports, thus _______ inflation, and it makes trips to foreign countries ________ for Americans. But it makes our exports _________. The blanks are best filled with. 
a) lowers; lowering; expensive; cheap b) raises; increasing; expensive; cheap 
c) lowers; lowering; cheap; expensive d) raises; increasing; cheap; expensive 
2. "Analysts have warned for months that the trade gap would widen once consumer demand picks up." The trade gap will become a bigger 
a) deficit because of lower exports b) deficit because of higher imports 
c) surplus because of a higher demand for money 
d) surplus because of increased domestic economic activity 
3. "He argued that one byproduct of the ballooning federal deficits of the early 1980s was a large rise in ________ and a concomitant loss of American competitiveness on world markets. The resulting rise in the U.S. ________ was the counterpart of the ___________ that kept domestic investment from falling as much as did national saving." Fill in the blanks. 
a) the interest rate; dollar; increased capital outflows 
b) the exchange rate; capital account surplus; falling U.S. dollar 
c) the interest rate; current account surplus; rise in the U.S. dollar 
d) the exchange rate; current account deficit; increased capital inflows 
4. "Also, through the mid-1980s the policies followed by the Reagan administration, particularly tight monetary policy combined with large government deficits, made the value of the dollar very high." These policies increased the value of the dollar because 
a) they raised interest rates which decreased imports 
b) they raised interest rates which increased capital inflows 
c) they lowered interest rates which increased exports 
d) they lowered interest rates which increased capital inflows



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