Country x’s economy is enjoying political stability and attracting foreign financial capital. at the same time country x’s government is borrowing to finance spending. how will these changes affect the loanable funds market in country x?

There will be a decrease in the supply of loanable funds .

Explanation:

The economy of the country is determined by the political climate prevailing in the country and it will also give strong impression about the country’s image in attracting foreign investment.

If the country has a strong majority government which can take decisions which favour for favourable environment for foreign investment will boost the economy and make it has a rolling economy.

Even if they borrow finance for spending it may have effect small changes in the supply of loanable funds.

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