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Answer to Question #64121 in Microeconomics for Jack Mooney

Question #64121
If government increases deficit spending, would interest rates increase or decrease? How would increase / decrease interest rates effect currency in foreign exchange market and how value of currency is affected? How would increased/decreased interest rates effect investment?
Expert's answer
If government increases deficit spending, interest rates remain unchanged. Interest rates increase for effect currency in foreign exchange market. Interest rates increase for effect investment.

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