English, asked by amamaqazi, 4 months ago

Question 4: (2 marks)
Explain how a large federal deficit impacts bond prices and interest rates?

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Answered by divyansh589

0

Answer:

When an increase in government expenditure or a decrease in government revenue increases the budget deficit, the Treasury must issue more bonds. This reduces the price of bonds, raising the interest rate. ... A higher exchange rate reduces net exports.

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