A small country is a net foreign borrower and its supply of loanable funds increases. As a result, the equilibrium quantity of loanable funds used in the country _ and the country's foreign borrowing .

Question

Quizplus · Accepted Answer

When the supply of loanable funds increases, the interest rate typically decreases, leading to a reduction in foreign borrowing as domestic funds become more attractive. However, the equilibrium quantity of loanable funds used in the country remains unchanged if the demand for loanable funds does not change.

A Small Country Is a Net Foreign Borrower and Its