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Originally Posted by psych09  I simply defined NFD for 2 marks. then i simply discussed that a deficit budget funded for the GFC will be aimed at increasing consumption which will increase investment as a result. Businesses will look to invest in interest rates overseas at a higher rate for a higher return on investment, Nfd will increase from these repayments having to be paid. hard question. |
i discussed crowding out, and how running a deficit will most likely be financed by overseas borrowing so as to not cause crowding out, resulting in an increase in NFD. not sure if i approached it correctly, but i had to do it in 5min before the end.