The key link between the 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 larger trade deficits
E)higher interest rates leading to more exports.

Question

Quizplus · Accepted Answer

The twin deficits refer to a country's current account (or trade) deficit and its fiscal deficit. The link between them often involves higher interest rates, which can attract foreign capital, leading to a stronger dollar. This makes imports cheaper and exports more expensive, potentially widening the trade deficit.

The Key Link Between the Twin Deficits Involves