Figure 5.4 Suppose the world consists of two large open economies, Canada and the rest of the world. The figures above represent loanable funds graphs for these two economies. -Refer to Figure 5.4.At an interest rate of 7%, A) foreign borrowers want to borrow more from international capital markets than is available. B) Canadian borrowers want to borrow more from the domestic market than is available. C) foreign lenders have more to lend in international capital markets than meets demand. D) Canadian borrowers want to borrow less in international capital markets than is available.

Question

Quizplus · Accepted Answer

At an interest rate of 7%, foreign lenders have excess capital to lend in international markets, indicating a surplus of supply over demand.

Figure 5.4 Suppose the World Consists of Two Large Open Economies, Canada