Suppose There Is an Increase in the Government Share of GDP

question 137

Essay

Suppose there is an increase in the government share of GDP.
(A)Draw a diagram showing the effect this has on the nongovernment share of GDP.What happens to interest rates?
(B)Suppose you observe that,concurrent with the increase in the government share of GDP,a decline in the net export share occurs.Is this a coincidence? Explain.
(C)If the decline in the net export share of GDP is substantial,what might this imply about the interest rate sensitivity of net exports?

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Definitions:

Knowledge Management

The process of capturing, distributing, and effectively using knowledge within an organization.

Low Power Distance

A cultural dimension where individuals in a society or organization prefer relatively equal power distribution and flatter hierarchies.

Legitimate Power

A type of power that is derived from having a formal position or authority in an organization, allowing for the control of resources and decision-making.

Power Holder

An individual or entity that possesses the authority or influence to make decisions, direct others, and enforce rules within a given context.