The impact of U.S.expansionary fiscal policy in the 1980s included which of the following?

Question

Quizplus · Accepted Answer

Expansionary fiscal policy involves increasing government spending and/or reducing taxes, which leads to increased demand for goods and services. This increased demand can lead to inflation and higher interest rates as the economy overheats. Additionally, as interest rates rise, investors may withdraw their money from countries with lower interest rates, leading to a higher exchange rate for the US dollar. However, higher exchange rates make US exports more expensive, leading to lower exports and a lower demand for US goods abroad. Therefore, the impact of US expansionary fiscal policy in the 1980s included higher interest and foreign exchange rates and lower exports, as seen in option A.

The Impact of U