A small country is a net foreign borrower and its domestic supply of loanable funds increases.Consequently,the equilibrium quantity of loanable funds used in the country ________ and the country's foreign borrowing ________.

Question

Quizplus · Accepted Answer

When the domestic supply of loanable funds increases, the equilibrium quantity of loanable funds used in the country does not change. This is because the increase in domestic supply is offset by a decrease in foreign borrowing.

A Small Country Is a Net Foreign Borrower and Its