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

Question

Quizplus · Accepted Answer

When the domestic supply of loanable funds increases in a country that is a net foreign lender, the additional funds are likely to be lent abroad, increasing foreign lending, while the equilibrium quantity of loanable funds used domestically remains unchanged.

A Small Country Is a Net Foreign Lender and Its