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Tidy Tidy
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8 years ago
Explain and show graphically the effect of a decrease in U.S. budget deficits that decrease U.S. interest rates on the demand and supply of U.S. dollars for euros.
Textbook 
Essentials of Economics

Essentials of Economics


Edition: 4th
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Repeat after me: 'Calm down. Things are gonna be fine. Things are gonna be all great. Just relax.' Wink Face

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#1
8 years ago
A decrease in U.S. interest rates would decrease the desire to invest in financial assets in the United States relative to the rest of the world. The demand for dollars would fall, causing the exchange rate for the dollar to fall. The lower exchange rate would increase net exports, leading to a smaller current account deficit.
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#2
8 years ago
I was confident with my answer, glad it was correct.

Oh, and thumbs-up are more than welcome Slight Smile
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