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If federal budget deficits increase, then a part of that deficitA.will be financed by domestic bond holders, who will buy fewer imports, thus increasing the U.S. trade deficit.B.will be financed by foreign dollar holders, who will buy fewer U.S. exports, thus increasing the U.S. trade deficit.C.will be financed by domestic bond holders, who will buy fewer U.S. exports, thus decreasing the U.S. trade deficit.D.will be financed by foreign dollar holders, who will sell fewer imports, thus decreasing the U.S. trade deficit.
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