A shift in demand toward the home country's goods would ________ the domestic real interest rate and ________ net desired saving (desired saving less desired investment)in the economy.

Question

Quizplus · Accepted Answer

A shift in demand toward the home country's goods would increase the domestic real interest rate due to higher demand for domestic currency and goods, which increases the cost of borrowing. This shift would also increase net desired saving in the economy, as higher interest rates encourage more saving and potentially reduce investment, widening the gap between desired saving and desired investment.

A Shift in Demand Toward the Home Country's Goods Would