A very small country is a net foreign lender 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 lending ________.

Question

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Since the country is a net foreign lender, an increase in the supply of loanable funds will not affect the demand for loanable funds within the country. Therefore, the equilibrium quantity of loanable funds used in the country will not change. However, the country's foreign lending will increase because there is a larger supply of loanable funds available for lending to other countries.

A Very Small Country Is a Net Foreign Lender and Its