Final answer:
Improvement in technology in a small open economy typically results in an increase in both loanable funds supply and demand, with a consequent increase in equilibrium national savings, given the rise in supply more substantially impacts savings. Following the same logic, a rise in the demand and a rise in the supply of loanable funds in the financial market will increase the quantity of loans made and received.
Step-by-step explanation:
When technology in a small open economy is improved, we would expect the loanable funds supply to increase because improved technology raises the productivity of capital, leading to higher returns on investments. This would encourage more savings, hence increasing the supply of loanable funds.
Meanwhile, loanable funds demand might also increase because with improved technology, businesses demand more loanable funds to invest in new technologies and equipment. Lastly, equilibrium national savings would increase if the rise in the supply of loanable funds outpaces the increase in demand, as the economy allocates more resources to savings over current consumption.
Reference to question 8 in the provided scenario, both a rise in the demand for loanable funds and a rise in the supply of loanable funds will lead to an increase in the quantity of loans made and received. An increased demand for loans from borrowers will result in more loans being given if lenders are willing to lend. Likewise, an increased willingness of savers to lend their funds will increase the quantity of loans available.