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Assuming an economy where the level of output (Y) is below potential, if an increase in government spending (G) shifts output towards potential, it is
Assuming an economy where the level of output (Y) is below potential, if an increase in government spending (G) shifts output towards potential, it is likely there will be ( a decrease/ an increase / no change) in the interest parity relation.
Given the above scenerio, net exports (NX) will likely:
A. decrease.
B. remain the same.
C. increase.
D. can't be determined.
(Please give me the right answer)
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