Question

For the three years from early 2002 to early 2005, the euro maintained a strong and steady rise in value against the U.S. dollar (USD). After a brief respite in 2005, the euro continued its climb against the USD into 2008. Which of the following were NOT a contributing factor in the assent of the euro and the decline in the dollar?
A) severe U.S. balance of payments deficits
B) a general weakening of the dollar after the attacks of September 11, 2001
C) large U.S. balance of payment surpluses
D) All of the above were contributing factors.

Answer 1

Answer:

The correct answer is C) large U.S. balance of payment surpluses

Explanation:

At the precise moment that a country imports more than it produces, it is forced to supply that difference by acquiring bank loans; otherwise, it is necessary to lend the accumulated surpluses. Therefore, if there is a deficit within the country balance, it can be said that the behavior of the financial balance will be positive.

Answer 2

Answer:

the answer is option C) large U.S. balance of payment surpluses

Explanation:

The periods in consideration 2002-2008 was not  a good financial period for the US. This resulted as an aftermath of several economic crisis including the attack on the world trade center in September 11, 2001.

This economic downturn reported an unfavorable balance of payment that kept Euros ahead of the dollar.

Therefore, Large U.S. balance of payment surpluses was not a contributing factor for he assent of the euro and the decline in the dollar.