In this two-part question we explore some implication of a possible increase in the interest rate paid on government debt. 1) Suppose that a country initially has a value of debt/GDP of one. Suppose that deficit/GDP is equal to 0.1. Suppose that before the increase in interest rate, the debt/GDP for the following year was forecasted at 1.15. If the interest rate grows from 4% to 5% how will the forecast be updated? What is the forecasted growth rate for the economy? 2) Continuing on the previous question. Following the increase in interest rate what do you expect to occur to exchange rates? Formally (via equations or diagrams) explain the reasoning behind your