If at a given real interest rate desired national saving is $60 billion,domestic investment is $30 billion,and net capital outflow is $20 billion,then at that real interest rate in the loanable funds market there is a
A)surplus.The real interest rate will rise.
B)surplus.The real interest rate will fall.
C)shortage.The real interest rate will rise.
D)shortage.The real interest rate will fall.

Question

Quizplus · Accepted Answer

At the given real interest rate, the total supply of loanable funds (desired national saving) is $60 billion, while the total demand (domestic investment plus net capital outflow) is $50 billion ($30 billion + $20 billion). This results in a surplus of $10 billion in the loanable funds market, causing the real interest rate to fall.

If at a Given Real Interest Rate Desired National Saving