Question: Use a diagram like Figure 17.4 (solid lines only) to show the effects of each of the following on the real interest rate and capital

Use a diagram like Figure 17.4 (solid lines only) to show the effects of each of the following on the real interest rate and capital investment of a country that is a net borrower from abroad. (LO6)

a. Investment opportunities in the country improve owing to new technologies.

b. The government budget deficit rises.

c. Domestic citizens decide to save more.

d. Foreign investors believe that the riskiness of lending to the country has increased.

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