Since Germany is a large open economy,the increase in German borrowing and investment in what was formerly East Germany in the early 1990s resulted in
A) a decline in the world real interest rate.
B) a shift to the right in the German supply of loanable funds curve.
C) an increase in the real interest rate in the United States.
D) a shift to the left in the German demand for loanable funds curve.

Question

Quizplus · Accepted Answer

An increase in borrowing and investment in Germany would increase the demand for loanable funds, leading to an increase in the real interest rate not just in Germany but potentially in other closely connected economies like the United States, due to the interconnected nature of global financial markets.

Since Germany Is a Large Open Economy,the Increase in German