Question: I need help with part B!!! Please explain everything 3. International example. The diagram is for the loanable funds market in U.S. Assume the Real

I need help with part B!!! Please explain everything

3. International example. The diagram is for the loanable funds market in U.S. Assume the Real U.S. government budget is currently balanced. Int. Rate SLF domestic sources 8% 5% Loanable funds from world DLF 40 60 70 Q of Loanable Funds In billions a. If the U.S. allows international transactions in financial markets and the world real interest rate is 5%, what would be: Real interest rate in U.S.: 5 % Quantity of loanable funds supplied (by private savings) in U.S.: 40 Quantity of loanable funds demanded (for U.S. investment): 70 Will the U.S. borrow funds from or loan funds to the world? barrow funds How much will be the amount of funds? 30 Will the U.S. be running a current account deficit or surplus? deficit How much will be the current account deficit or surplus? 30 b. Suppose that prospects for profits in the U.S. look good and firms want to expand. Mark the shift in DLF in the diagram. What will happen to the current account? Will the U.S. see an increase or decrease in the flow of funds for investment into the U.S

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