Question

Which of these would reduce the United States balance-of-trade deficit? A) an increase in the demand for foreign goods in the United States B) an increase in the U.S. Interest rates compared to other countries C) an increase in the U.S.'s rate of inflation compared to other countries D) an increase in the value of foreign currency relative to the United States dollar Eliminate

Answer 1

The correct answer is C) an increase in the U.S.'s rate of inflation compared to other countries.

According to one commentator, "A weaker dollar makes imports more expensive and exports cheaper and improves the trade balance"