An article in the Wall Street Journal in 2017 noted? that: \"President Donald Tr

Question

An article in the Wall Street Journal in 2017 noted? that: "President Donald Trump said Wednesday the U.S. dollar? 'is getting too? strong' and he would prefer the Federal Reserve keep interest rates? low."??

?Source: Gerard? Baker, Carol E.? Lee, and Michael C.? Bender, "Trump Says Dollar? 'Getting Too? Strong,' Won't Label China a Currency? Manipulator," Wall Street

Journal?,

April? 12, 2017.

What is the connection between the? president's two observations about economic? policy? Briefly explain.

A.

Keeping interest rates low would increase the? dollar's value because U.S. exports would become less expensive to foreign consumers.

B.

Lower interest rates would increase the? dollar's value because U.S. investors would demand more foreign currency.

C.

Lower interest rates would decrease the? dollar's value because foreign investors would demand fewer dollars.

D.

Keeping interest rates low would decrease the? dollar's value because it would decrease the money supply.

Explanation / Answer

Ans:

Option C

Lower interest rates would decrease the? dollar's value because foreign investors would demand fewer dollars.

when the interest rate is higher it will attract foreign investors. This will cause the demand and value of dollar to increase.when the interest rate is low, it will be unattractive for foreign investors and this decreases the dollar value.

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