Your company wants to expand its production and needs to know the impact of a surge in East Asian incomes this year on the US economy. You know that East Asian economies have been growing at an average rate of 5 percent per year, and the US economy has been growing at 3 percent per year along its long-run equilibrium path

Your company wants to expand its production and needs to know the impact of a surge in East Asian incomes this year on the US economy. You know that East Asian economies have been growing at an average rate of 5 percent per year, and the US economy has been growing at 3 percent per year along its long-run equilibrium path. You hire a consultant who tells you that everyone believes that: (1) the faster pace of East Asian countries this year is a one-time jump in income level and those economies will return to their 5 percent growth rate after this year; (2) the (risk-free) interest rates in East Asia will remain constant; and (3) the economic policies in the US will not change as a result of the temporary increase in Asia’s growth rate. If you believe these claims, you should conclude that by the end of this year, the developments in East Asia will tend to: