One journalist writing about the complex interactions between various markets in

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This statement is false because when the Government spends more in economy than the taxes it takes makes government in Fiscal deficit now to Finance the deficit Government sells its bonds in the market therefore increasing supply of government bonds in the market now the Government has to sell its bonds so what should it do to increase the demand of its bonds==>pay a higher Interest rate therefore interest rate in the market increases thereby decreasing the Investment in Economy and hence increasing the Foreign exchange rate because due to lack of Investment in economy the Industrial output decreases due to which companies are not able to buy resources from other countries thereby creating a problem of Foreign reserves in such case Government decreases its exchange rate to boost exports since demand in local economy falls due to lack of investment. Interest rates on bonds are reduced when Government buys backs the bonds. Please Rate If still in doubt then message me

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