Which of the following statements is correct when the Australian government runs a budget deficit?
A)The supply of loanable funds increases
B)The interest rate falls
C)The dollar appreciates
D)It causes a trade balance surplus

Question

Quizplus · Accepted Answer

When the Australian government runs a budget deficit, it often borrows from the financial markets, which can lead to higher interest rates. Higher interest rates can attract foreign capital, increasing demand for the Australian dollar and causing it to appreciate.

Which of the Following Statements Is Correct When the Australian