Answer:
C. American businesses; American consumers.
Explanation:
Currently so many businesses of America are overseas, approximately 40%.
Now when the dollar turns weak these businesses are benefited in a manner that is the buyers needs to pay more for such deals.
Further with this as the buyers needs to pay more, even in the country the imported goods turns expensive as dollars decrease their value.
Accordingly, it is the american business man who gets benefited with weaker dollar, and the american consumer has to pay more for this.
The impact of a federal budget deficit on interest rates and the trade balance is that it can bring about the inflow of foreign financial capital as well as a better exchange rate.
<h3>How can budget deficit have effect on trade balance?</h3>
When there is a stronger exchange rate there will be a little bit difficult for all the exporters that want to sell their goods to foreign countries, and at this time the imports will become cheaper.
In this case, trade deficit will definitely bring about an inflow of foreign financial capital as well as a good exchange rate.
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Through the expectations hypothesis and the liquidity preference theory of the term structure of interest rates, liquidity must be zero for the forward rate to be equal to the expectations of future short rates.
<h3 /><h3>What is expectation theory?</h3>
Corresponds to a forecast of short-term interest rates by analyzing them against current long-term interest rates.
Therefore, it is a theory used to assist in better understanding and forecasting short-term securities trading in the future.
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