If the nongovernment share of GDP shifts to the right and the government share of GDP remains constant, then
A)there must be an increase in taxes.
B)the dollar exchange rate must weaken.
C)there must be a decrease in taxes.
D)the interest rate decreases.
E)the interest rate increases.

Question

Quizplus · Accepted Answer

When the nongovernment share of GDP increases while the government share remains constant, it implies higher private sector activity, which can lead to increased demand for funds and thus higher interest rates.

If the Nongovernment Share of GDP Shifts to the Right