A Small Country Is a Net Foreign Borrower and Its

question 122

Multiple Choice

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

• A)increases; does not change
• B)does not change; decreases
• C)does not change; increases
• D)does not change; does not change

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Definitions:

Market Demand

The relation between the price of a good and the quantity purchased by all consumers in the market during a given period, other things constant; sum of the individual demands in the market.

Substitute Good

A product or service that can be used in place of another to satisfy similar needs or desires, often influencing consumer choices and market dynamics.

Equilibrium

A situation in a market where the quantity demanded equals the quantity supplied, leading to no net change in price.

Quantity Supplied

The total amount of a good or service that producers are willing to sell at a given price level.