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Assume that because of increased political instability, investors move their funds out of the country of Tara. a. How will this decision by investors affect
Assume that because of increased political instability, investors move their funds out of the country of Tara.
a. How will this decision by investors affect the interest rate and the quantity of loanable funds at the equilibrium? Explain and show it using a correctly labeled graph of the loanable funds market
b. Given your answer in part (a), what will happen to Tara's rate of economic growth? Explain.
c. How will this decision by investors affect the international value of Tara's currency on the foreign exchange market? Explain graphically.
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