Arbitrage keeps markets from reaching equilibrium

China is a large open economy with an extraordinarily high saving rate

If, as seems likely, there is a decrease in desired saving in the coming years, what effects should we expect to see on China's trade balance (net capital flow), domestic real interest rate, and actual levels of saving and investment?

The supply of loanable funds curve is

a. upward sloping because fewer people are persuaded to forgo current consumption as the interest rate rises b. downward sloping, showing that more investment will be undertaken as inflation decreases c. upward sloping because the opportunity cost of goods and services that must be forgone increases d. downward sloping, showing that as more funds are made available, the risk cost of loaning funds decreases e. usually horizontal