1. Keynesian theory predicts that expansionary fiscal policy either higher spending or lower taxes will raise the real interest rate. Using data since 1960, graph the Federal government budget deficit, the state-local government budget deficit (both relative to GDP), and the real interest rate (three-month Treasury bill rate minus the CPI inflation rate over the preceding twelve-month period). Do you see a link between deficits and real interest rates? In what period does the relationship seem clearest? Do your answers change when the ten-year government bond interest rate is used instead of the three-month rate?