Growing animosity between the US and Saudi Arabia might lead to the Saudis selling their holdings of US Treasuries. Saudi holdings of US Treasuries stand at $119.2bn. While this is a small number compared to the $23.7trn of US Treasuries outstanding, if the Saudis were to aggressively pursue a policy of divestment in US assets, it could lead to some repercussions (particularly if followed by other countries). If the Saudis and other geopolitical rivals were to pursue a policy of divestment, what would need to change to generate a meaningful economic impact? Please note that the comment here refers to changes in the allocation of Saudi (and potentially other rivals) bond holdings rather than to changes in their savings rate. a) Assume that neither the Saudis and other rivals change their savings/investment decisions other than their holdings of Treasuries, what is likely to happen to the world equilibrium real interest rate? (10 points) b) What else would the Saudis (and other rivals) have to change to have a meaningful impact on the US economy? (10 points)