Fiscal policy in the past three years

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During the past three years, the US dollar has appreciated in real terms against all other currencies. During that same period, the US government has increased its expenditure faster than GDP growth and has implemented a major tax cut. No similar fiscal expansion has taken place among the trade partners of the US. Some economists believe the fiscal policy in the US is a major cause of the appreciation of the dollar. Could this claim be a correct assessment? Explain your answer and discuss why the dollar's appreciation may or may not relate to the fiscal policy in the past three years.

Reference no: EM132476745

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