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Explain the causal relationship between the series

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Reference no: EM131737454

Question: The following graph shows a fairly high correlation between the ratio of capital spending to GDP and the inverted ratio of net exports to GDP over the post-WWII period in the US - i.e. the bigger the trade deficit, the higher the investment ratio. Explain the causal relationship between these two series. Would you expect this relationship to continue in the future?

403_GDP.png

Reference no: EM131737454

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