APFIVE Foreign Interest Rates and Loanable Funds Market
If a foreign country raises its interest rates while the U.S. Federal Reserve maintains its current rate, what is the most likely impact on the loanable funds market in the United States?
A
Increase in supply of loanable funds as domestic saving rises
B
No significant change as domestic factors outweigh international capital flows
C
Decrease in demand for loanable funds as investment falls
D
Decrease in supply of loanable funds as capital flows abroad
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