If at a given real interest rate desired national saving is $150 billion, domestic investment is...

If at a given real interest rate desired national saving is $150 billion, domestic investment is $90 billion, and net capital outflow is $70 billion, then

	a.	the real interest rate will rise and net exports will fall.
	b.	the real interest rate will fall and net exports will fall.
	c.	the real interest rate will fall and net exports will rise.
	d.	the real interest rate will rise and net exports will rise.

Solutions

Expert Solution

National saving = 150 billion

Domestic investment = 90 billion

Net capital outflow = 70 billion

There is a surplus in the loanable funds market so the real interest rate will fall

option(C)

Rahul Sunny answered 1 year ago

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