How can a global savings glut affect the United States?
A) It can reduce the world real interest rate, thus encouraging borrowing by Americans.
B) It can increase the world real interest rate, thus encouraging saving by Americans.
C) It can reduce the supply of loanable funds for the United States.
D) It can reduce the demand for loanable funds for the United States.

Question

Quizplus · Accepted Answer

A global savings glut can reduce the world real interest rate, which means that it will encourage borrowing by Americans from other countries since it is now cheaper to borrow. This can lead to an influx of foreign capital into the United States and increase investment and economic growth.

How Can a Global Savings Glut Affect the United States