If a country with a domestic real interest rate higher than the world real interest rate decides to enter the global loanable funds market, which of the following events will occur?

Question

Accepted Answer

The country becomes a net foreign borrower of funds and its domestic real interest rate falls.

Answer

The country's domestic real interest rate falls, but it does not borrow or lend loanable funds internationally.

Answer

The country becomes a net foreign borrower of funds and its domestic real interest rate rises.

Answer

The country becomes a net foreign lender of funds and its domestic real interest rate rises.

Answer

The country becomes a net foreign lender of funds and its domestic real interest rate falls.

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If a country with a domestic real interest rate higher than the world real inter...

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