The key link between the so-called twin deficits involves
A)higher interest rates and a stronger dollar
B)lower interest rates and a stronger dollar
C)higher interest rates and a weaker dollar
D)lower interest rates and therefore larger trade deficits
E)higher interest rates leading to more exports

Question

Quizplus · Accepted Answer

The twin deficits refer to a situation where a country has both a fiscal deficit and a current account deficit. Higher interest rates can attract foreign capital, leading to a stronger dollar, which can worsen the trade deficit by making exports more expensive and imports cheaper.

The Key Link Between the So-Called Twin Deficits Involves