In an open economy, the source for the demand for loanable funds is
A)national saving.
B)national saving + net capital outflow.
C)domestic investment.
D)domestic investment + net capital outflow.

Question

Quizplus · Accepted Answer

In an open economy, the demand for loanable funds comes from both domestic investment and net capital outflow. Domestic investment requires funding for new projects and expansions, while net capital outflow represents the investment in foreign assets minus foreign investments in the domestic economy. Together, they constitute the total demand for loanable funds.

In an Open Economy, the Source for the Demand for Loanable