Use a diagram of the loanable funds market to illustrate the effect of the following events on the equilibrium interest rate and quantity of loanable funds.
a. An economy is opened to international movements of capital, and a capital inflow occurs
b. Retired people generally save less than working people at any interest rate. The proportion of retired people in the population goes up.

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a The supply of loanable funds increases when the capital inflow into t... View the full answer