A Small Country Is a Net Foreign Borrower and Its

question 51

Multiple Choice

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

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

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Definitions:

Status Quo

The existing state of affairs or current condition or situation, which is often maintained or referred to in discussions of change.

Contract Creation

The process of forming an agreement between parties that is legally enforceable.

Disaffirm

To express denial or contradiction of a previous statement, belief, or agreement.

Minor Contracts

Agreements entered into by individuals under the age of legal majority, which are often voidable at the discretion of the minor.