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r 170 160+ 150 140+ 130 - 120 110 100+ 90 Supply 80- 70 60+ SO 40- Demand 30 20- 10- 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

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Answer #1

Households

Domestic interest rate is 70 basis points while world interest rate is 120 basis points. Clearly domestic savings are able to earn greater rate of interest at the world market so that households will be ending of getting gains from trade.

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