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The quantity of U.S. loanable funds demanded by foreign governments will be inversely related to U.S. interest rates.
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Exhibit 2.4 Impact of Increased Foreign Interest Rates on the Foreign Demand for U.S. Loanable Funds
Exhibit 2.5 Determination of the Aggregate Demand Schedule for Loanable Funds
where
DA S A
DA = the aggregate demand for loanable funds SA = the aggregate supply for loanable funds
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iR i E (INF )
The greater the expected rate of inflation, the greater the nominal rate of interest.
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Practice Problems
2,3,4,6,7,8, Interpreting Financial News
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