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Suppose the government budget deficit increases, changing the equilibrium quantity demanded for financial capital by 10 2.51% of GDP. Show the effect this increase in deficit Supply spending has on supply, demand, and equilibrium point E in the graph and answer the questions. B What is the new interest rate? 5.50 Interest rate (%) Interest rate: Ceteris paribus, private investment spending 2 O does not change. Demand O increases. 30.00 10 15 20 25 35 40 45 50 O decreases. 30 Quantity of financial capital ($ of GDP)

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