Question: i need a a graph for this question with assuming a and b parts with correct and full answer. Lonsider a small open economy that
Lonsider a small open economy that initially has a trade deficit. a) Draw a diagram illustrating this economy's loanable funds market. Be sure to label the axes, curves (with the subscript i) and equilibrium values (with the subscript 1 ). b) Assume that two changes have occurred: there has been a decrease in investment demand and all other countries have engaged in contractionary fiscal policy. As a result of these changes, the small open economy now has balanced trade. On the same diagram as part a, illustrate these changes to the economy's loanable funds market. Be sure to label the curves and new equilibrium values (each with the subscript 2 )
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