Question

At the equilibrium real interest rate in the open-economy macroeconomic model, what happens?

1) The quantity of loanable funds demanded equals the quantity of loanable funds supplied.
2) The quantity of loanable funds demanded is greater than the quantity of loanable funds supplied.
3) The quantity of loanable funds demanded is less than the quantity of loanable funds supplied.
4) The quantity of loanable funds demanded is equal to the quantity of loanable funds supplied.

Answer 1

At the equilibrium real interest rate in the open-economy macroeconomic model, the quantity of loanable funds demanded is equal to the quantity of loanable funds supplied.

Step-by-step explanation:

The equilibrium real interest rate in the open-economy macroeconomic model occurs when the quantity of loanable funds demanded is equal to the quantity of loanable funds supplied. This means that borrowers are willing to borrow the same amount of funds that lenders are willing to lend, resulting in a balance in the loanable funds market. At this equilibrium interest rate, there is no excess demand or excess supply of loanable funds.