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Which of the following should exert downward pressure on interest rates? Select all that apply. increases...

Which of the following should exert downward pressure on interest rates? Select all that apply.

increases in money supply

higher foreign exchange rates

trade deficits

budget surpluses

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Answer #1

Best possible answer for this is Tarde deficits.

Explanation: A country facing trade deficit is short of capital to pay off for its imports. It need to increase its amount of exports for removing the trade deficit and making its balance of payments favourable. The country will lower its interest rates that is the cost of borrowing to encourage businesses to take more loans for expanding thier operations and raising thier exports. More exports means more inflow of foreign capital in an economy which will obviously help in balancing its trade deficit.

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