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8. The impact of international capital flows Suppose that the following graph depicts the market for funds in the U5 credit market. The blue line,
8. The impact of international capital flows Suppose that the following graph depicts the market for funds in the U5 credit market. The blue line, labeled D, represents the demand for funds. The supply curve labeled s1 represents the supply curve of funds from American sources, with no foreign funds in the market. The supply curve labeled s2 represents the supply curve of funds from both American and foreign sources. Without influence from foreign sources of funds, the long-term equilibrium interest rate is %. With influence from foreign funds, the longterm equilibrium interest rate is %. The following graph depicts the market for business investments in the United States. The green line represents the relationship between the longterm interest rate and the amount of business investments. Use the black point (plus symbol) to plot the point that represents the cambination of business investment and long-term interest rate that comes about when there is no influence from foreign funds. Then, use the grey point (star symbol) to plot the point that represents the combination of business investment and Iong-term interest rate when the influence from foreign funds is accounted for
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