Explain the net effect on nominal interest rates

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Question: President Donald Trump plans to pass a $1 Trillion infrastructure spending bill. Use the loanable funds model to explain the net effect on nominal interest rates and nominal exchange rates. For example, if the current 30-year Treasury Bond has annual interest rate of 5%, in which direction is it likely to move in the near future: 6% or 4%. Additionally, if the Mexican Peso/$US Dollar exchange rate is currently 19.50 Pesos/$1 Dollar, is it likely to be 18.50 Pesos of 21.50 Pesos to each US Dollar? (Remember to use the loanable funds model for any credit)

Reference no: EM132049808

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