#3 (this question will continue in tutorial 5) Suppose that Northlandia and Southlandia are the only two countries in the world, and that each nation sees the other's assets as identical to its own. Consider the loanable funds markets of each country. (a) Northlandia Interest rate S 12% 10 00 0 100 200 300 400 500 600 700 800 900 1,000 Quantity of loanable funds (b) Southlandia Interest rate S 12% 10 8 6 NA 0 100 200 300 400 500 600 700 800 900 1,000 Quantity of loanable funds a) When each economy is closed, how much are savings and investments in each economy? How much is the interest rate in each economy? b) Assume now that the economies open up, and that capital is fully mobile between the two countries. What do you think will be the world interest rate? Explain your answer. c) Assume that the world interest rate will be 8%, what will be savings and investments in each country? d) What will be NFI of each country