In a two-economy model of the United States and another large economy made up of the rest of the world,if desired saving by the rest of the world declined
A)U)S. investment would increase.
B)U)S. saving would decrease.
C)the world real interest rate would increase.
D)the world real interest rate would decrease.

Question

Quizplus · Accepted Answer

A decline in desired saving by the rest of the world would lead to a decrease in the global supply of loanable funds, causing the world real interest rate to increase.

In a Two-Economy Model of the United States and Another