Suppose There Is an Increase in the Government Share of GDP

question 112

Essay

Suppose there is an increase in the government share of GDP.
(A) Draw a tiagram showng the effect the has an the nongurernment share of GDP. What happens to interest rates?
(B) Suppose you dberve that concurent with the increase in the govermment share of GDP, a decline in the net exgart share accurs. Is this a caincidence? Esinlan.
(C) If the decline in the net exgart share of GDP is substantial what might this imply abaut the interest rate sensitivity of net exguarts?

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