Which of the following must be true?
A)Savings must equal investment in an open economy.
B)Savings must equal investment in a closed economy.
C)Savings must equal consumption in an open economy.
D)Savings must equal consumption in a closed economy.

Question

Which of the following must be true?
A)​Savings must equal investment in an open economy.
B)​Savings must equal investment in a closed economy.
C)​Savings must equal consumption in an open economy.
D)​Savings must equal consumption in a closed economy.

Quizplus · Accepted Answer

In a closed economy, there is no trade with other nations, so all income is either used for consumption or investment. Therefore, savings, which is income not used for consumption, must equal investment. In an open economy, there is foreign trade, which can affect savings and investment levels.

Which of the Following Must Be True