Q. To financelarge U.S. federal Budget deficits, the Federal Reserve increases the money supply. This leads to a surplus of dollars world wide. What happens to the U.S. dollar and trade?
A. The dollar appreciates in value, stimulating imports but curtailing exports.
B. The dollar appreciates in value, stimulating exports but curtailing imports.
C. The dollar depreciates in value, stimulating imports but curtailing exports.
D. The dollar depreciates in value, stimulating exports but curtailing imports.