On your diagrams, show how a budget deficit would affect the interest rate, capital flows, the exchange rate and the trade balance.

On your diagrams, show how a budget deficit would affect the interest rate, capital flows, the exchange rate and the trade balance. Also, explain how each of these variables is affected using economic intuition.

When there is a budget deficit it means the nation does not have sufficient moneyto pay for all the expenses planned to be paid for thus the country has to borrowthe money and government borrows...