Exhibit 15.1

At the Plaza Accord of 1985, the Group-of-Five nations agreed to drive the value of the dollar downward (i.e., depreciation) so as to help reduce the U.S. trade deficit. Answer the following question(s) on the basis of this information.
-Refer to Exhibit 15.1.The Federal Reserve might refuse to support the accord on the grounds that when helping to drive the dollar's exchange value downward, the required policy may also cause
A) higher inflation in the U.S.
B) a larger budget deficit in the U.S.
C) higher unemployment in the U.S.
D) slower economic growth in the U.S.

Question

Exhibit 15.1

At the Plaza Accord of 1985, the Group-of-Five nations agreed to drive the value of the dollar downward (i.e., depreciation) so as to help reduce the U.S. trade deficit. Answer the following question(s) on the basis of this information.
-Refer to Exhibit 15.1.The Federal Reserve might refuse to support the accord on the grounds that when helping to drive the dollar's exchange value downward, the required policy may also cause
A) higher inflation in the U.S.
B) a larger budget deficit in the U.S.
C) higher unemployment in the U.S.
D) slower economic growth in the U.S.

Quizplus · Accepted Answer

When driving the dollar's exchange value downward, the required policy may also cause higher inflation in the U.S.

Exhibit 15.1 At the Plaza Accord of 1985, the Group-Of-Five Nations Agreed