A federal budget deficit may ________ exchange rates (foreign currency per domestic currency)and ________ the balance of trade for goods and services.

Question

Quizplus · Accepted Answer

A federal budget deficit can lead to a depreciation of the domestic currency (raise exchange rates) and worsen the balance of trade by increasing imports and/or reducing exports (reduce the balance of trade).

A Federal Budget Deficit May ________ Exchange Rates (Foreign Currency