If a country has a high savings rate relative to other countries, then the
A)supply of loanable funds is larger, interest rates are lower, and net capital outflow is higher for that country than for others.
B)supply of loanable funds is smaller, interest rates are higher, and net capital outflow is lower for that country than for others.
C)demand for loanable funds is larger, interest rates are higher, and net capital outflow is lower for that country than for others.
D)government must subsidize production in order to encourage international trade.

Question

Quizplus · Accepted Answer

A high savings rate means there is a larger supply of loanable funds available in the country. This increases the supply of loanable funds, leading to lower interest rates, which in turn encourages borrowing and investment, leading to an increase in net capital outflow.

If a Country Has a High Savings Rate Relative to Other