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

Question

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When a small country is a net foreign borrower and its demand for loanable funds increases, the equilibrium quantity of loanable funds used in the country increases as there is a greater demand for funds. Additionally, the country's foreign borrowing also increases as it is relying more on borrowing from outside sources to finance its growth. Therefore, both the equilibrium quantity of loanable funds used and the country's foreign borrowing increase in this scenario.

A Small Country Is a Net Foreign Borrower and Its