Foreign Interest Rates and Loanable Funds Market
Suppose a foreign country increases its interest rates while interest rates in the United States remain unchanged. What is the most likely effect on the loanable funds market in the United States?
A
Decrease in demand for loanable funds as investment falls
B
No significant change as domestic factors outweigh international capital flows
C
Decrease in supply of loanable funds as capital flows abroad
D
Increase in supply of loanable funds as domestic saving rises
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