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In a Large Open Economy

Question 47

Multiple Choice

In a large open economy,


A) domestic lending and borrowing decisions have no impact on the world real interest rate.
B) an increase in the domestic supply of loanable funds would lower the world real interest rate.
C) the domestic equilibrium real interest rate is determined independently of foreign borrowing and lending.
D) an increase in the domestic demand for loanable funds would lower the world real interest rate.

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