A weaker dollar places ____ pressure on U.S. inflation, which in turn places ____ pressure on U.S. interest rates, which places ____ pressure on U.S. bond prices.

Question

​A weaker dollar places ____ pressure on U.S. inflation, which in turn places ____ pressure on U.S. interest rates, which places ____ pressure on U.S. bond prices.

Quizplus · Accepted Answer

A weaker dollar can lead to higher inflation as imports become more expensive, which puts upward pressure on U.S. inflation. Higher inflation can lead to upward pressure on U.S. interest rates as central banks may raise interest rates to combat inflation. Higher interest rates put downward pressure on bond prices because existing bonds with lower yields become less attractive compared to new bonds with higher yields. Therefore, a weaker dollar places upward pressure on U.S. inflation, which in turn places upward pressure on U.S. interest rates, which places downward pressure on U.S. bond prices.

​A Weaker Dollar Places ____ Pressure on U

A Weaker Dollar Places ____ Pressure on U