Macroeconomics 9th Edition by David Colander

Exercise 43

A Wall Street Journal article, "As Fear of Deficits Falls, Some See a Larger Threat," describes the following threat of a high U.S.udget deficit:
[T]he investors who finance our deficits by buying Treasury bonds and bills, especially the foreigners who buy a larger share of them than ever, will question our ability to repay them, and balk at lending more- triggering a big drop in the dollar and much higher interest rates.
a.hy would a drop in foreign confidence in the U.S.bility to repay debt lead to a drop in the dollar and much higher interest rates
b.n what way are higher interest rates and a lower value of the dollar bad for the U.S.conomy