8. The impact of international capital flows Suppose that the following graph depicts the market for funds in the US credit market. The blue line, labeled D, represents the demand for funds. The supply curve labeled s₁ represents the supply curve of funds from American sources, with no foreign funds in the market. The supply curve labeled 82 represents the supply curve of funds from both American and foreign sources. Long-Term Interest Rate 2 1 0 о 10 9 8 D Slope: -1 Amount of Funds ? Without influence from foreign sources of funds, the long-term equilibrium interest rate is term equilibrium interest rate is %. With influence from foreign funds, the long- %. The following graph depicts the market for business investments in the United States. The green line represents the relationship between the long- term interest rate and the amount of business investments.

Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: Open-economy Macroeconomics: Basic Concepts
Section: Chapter Questions
Problem 2QR
Question
8. The impact of international capital flows
Suppose that the following graph depicts the market for funds in the US credit market. The blue line, labeled D, represents the demand for funds. The
supply curve labeled s₁ represents the supply curve of funds from American sources, with no foreign funds in the market. The supply curve labeled
82 represents the supply curve of funds from both American and foreign sources.
Long-Term Interest Rate
2
1
0
о
10
9
8
D
Slope: -1
Amount of Funds
?
Without influence from foreign sources of funds, the long-term equilibrium interest rate is
term equilibrium interest rate is
%. With influence from foreign funds, the long-
%.
The following graph depicts the market for business investments in the United States. The green line represents the relationship between the long-
term interest rate and the amount of business investments.
Transcribed Image Text:8. The impact of international capital flows Suppose that the following graph depicts the market for funds in the US credit market. The blue line, labeled D, represents the demand for funds. The supply curve labeled s₁ represents the supply curve of funds from American sources, with no foreign funds in the market. The supply curve labeled 82 represents the supply curve of funds from both American and foreign sources. Long-Term Interest Rate 2 1 0 о 10 9 8 D Slope: -1 Amount of Funds ? Without influence from foreign sources of funds, the long-term equilibrium interest rate is term equilibrium interest rate is %. With influence from foreign funds, the long- %. The following graph depicts the market for business investments in the United States. The green line represents the relationship between the long- term interest rate and the amount of business investments.
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