If Congress votes to increase spending, how would output, the interest rates and the international value of the dollar (based on change in interest rates) change as a result

Increase, Increase, Increase

Explanation:

If Congress votes to increase spending, and the government increase the spending, the output will increase, interest rate will increase and the international value of the dollar will increase as well.

This is because aggregate demand will increase which will shift the aggregate demand curve to the right and will GDP will be higher. This also increases the world GDP because the US economy is a major part of the world economy. As the government spending is increased, government will face or decline in public savings and therefore National saving. To finance its budget deficit it will increase the rate of interest. Since the United States influences the world interest rate, as a result the world interest rate would increase. Capital will start flowing in the United States increasing the demand for US dollar. This will increase the price of US dollar.

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