Chapter 8R, Problem 6MCQ

To determine

To find:

Import on country S.

Answer to Problem 6MCQ

Option A is correct.

Explanation of Solution

Option A is correct as due to low interest rate, the quantity of loanable funds will decrease.

Option B is incorrect as the supply of loanable funds will not increase.

Option C is incorrect as the demand for loanable fund will not decrease.

Option D is incorrect as the supply of loanable funds will not decrease.

Option E is incorrect as there will not be further reduction in interest rate as it is at present low.

Economics Concept Introduction

Financial account is a component of balance of payments that records transactions of assets and liabilities to nonresidents concerning financial assets.

Current account is also a component of balance of payments that records transactions of goods and services with home country and rest of the world.