Effect of change in interest rates on govt. spending/revenue (1 Viewer)

[jonnathann]

ok well we can easily tell how IR can influence C and I so yeh no need to ask bout that. But for instance, if there was an increase in IR, would it directly lower government spending as it is another component of AD. Well i can bs it up n say "govt's would tend to spend less as they expect lower revenue as people spend less which result in less company profits and tax as a result". But is that a bit farfetched? Any comments regarding IR and effects on govt. welcome. Cheers.

 

[d_a_n_z]

Do you need to say how it effects every level?
I'd just talk about policy mix...and FP rather than how MP effects g???

 

[Cityboy]

If interest rates are increasing it is more likely that the government will run a contractionary fiscal policy, if the RBA decreases interest rates it is more likely that the government will run an expansionary fisccal policy.

 

[FD3S-R]

go back to fiji