Because of the relationship between net capital outflow and net exports, the level of net capital outflow at the equilibrium real interest rate implies that the economy is experiencing.Now suppose the government is experiencing a budget deficit. This means that portable funds, which leads to.After the budget deficit occurs, suppose the new equilibrium real interest rate is 69. The following graph shows the demand curve in the foreign currency exchange market:Use the green line (triangle symbol)
Because of the relationship between net capital outflow and net exports, the level of net capital outflow at the equilibrium real interest rate implies that the economy is experiencing.Now suppose the government is experiencing a budget deficit. This means that portable funds, which leads to.After the budget deficit occurs, suppose the new equilibrium real interest rate is 69. The following graph shows the demand curve in the foreign currency exchange market:Use the green line (triangle symbol)
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