(Answered) Using the markets for loanable funds foreign-currency

Management Studies

Using the markets for loanable funds, foreign-currency exchange, and net capital outflow, explain what happens to the real exchange rate and the real interest rate if: Draw the graphs for yourself and in your explanations indicate which curve(s) shift(s) and the direction of the shift(s)...

a. The U.S. government runs a budget surplus.

b. The U.S. eliminates an import quota on Japanese cars.

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