1. 1. How are you on the demand side of
the loanable funds market?
2. How are you the supply side of the
loanable funds market?
3. Calculate the real interest rate if the
CPI is 4% and the interest rate is 6%
4. How would your behavior change if
the interest rate increased, but CPI
stayed constant?

2.  Exports $100B
to India &
Japan
 Imports $50 B
from India &
Japan
 Net Exports
 Current
Account
 Capital
Account
 NCO?
 Imports $75B to
China & Japan
 Exports $25B to
China and
Japan
 Net Exports
 Current
Account
 Capital Account
 NCO?
NCO = purchases of F. Assets by locals – purchases of domestic assets by foreigners
 Exports $75B
to India &
China
 Imports $75B
from India &
China
 Net Exports
 Current
Account
 Capital
Account
 NCO?

5. Change to r?

11.  US firms increase direct
investment in a poor country such
as Guatemala?
 Loanable funds in US S or D?
 What happens to NCO?
 How does that effect the US $
exchange rate in the Forex
market?

12. Page 691 Problem #1,6, 8, 9, 10,11

13.  Balance of payments
 Net importer/Exporter
(explanation of why) (oil)
 NCO
 Trading blocs
 5 export goods
 3 imported goods
 Exchange rate between US, Euro,
Yen
 Graph: 10 year history of exchange
rate between US Dollar
 Cite your source
Choose 1:
Poster
Pamphlet
Essay
Website