Think about an economy that is open to trade with the rest of the world and where government spending is rising by 5% every year. Notice this a high-stake question. To get full credit make sure you talk in detail about all of the effects of this policy.

(a) Verbally discuss the impact of this policy in the short run (14 pts)

(b) Verbally discuss the impact in the long run (8 pts)

(c) Discuss the additional effects that arise in the open economy (12 points)

(d) Discuss the effects on deficit and debt (6 points)