In order to change the level of national economic activity and defend the value of the dollar in international trade, the federal government
A) frequently requests voluntary contributions to the Treasury Department from businesses and private individuals.
B) imposes tariffs on all goods imported to the United States.
C) enforces spending cuts on state government agencies.
D) manipulates interest rates.
E) lowers the amount of money that states can legally collect from sales and income taxes.

Question

Quizplus · Accepted Answer

The federal government has the power to manipulate interest rates, which can affect the level of national economic activity by stimulating borrowing and spending or saving and investing. The government can also defend the value of the dollar in international trade by adjusting the interest rates. A higher interest rate can attract foreign investors and strengthen the US dollar.

In Order to Change the Level of National Economic Activity