If a budget surplus leads to a decrease in U.S. real interest rates, the lower rates will tend to cause
A) the dollar to appreciate.
B) the dollar to depreciate.
C) a decrease in private investment.
D) a decrease in net exports.

Question

Quizplus · Accepted Answer

Lower real interest rates make U.S. assets less attractive to foreign investors, leading to a decrease in demand for the dollar, which causes the dollar to depreciate.

If a Budget Surplus Leads to a Decrease in U