Equilibrium in an Open Economy Is Characterized by

question 15

Multiple Choice

Equilibrium in an open economy is characterized by

• A) Net exports = net capital outflow.
• B) Net exports + net capital outflow = savings.
• C) Domestic investment + net capital outflow = savings.
• D) Both a and c are correct.

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Definitions:

Income Tax

A tax levied by governments on individuals or entities based on their income or profits.

Saving Rate

The portion of income that is not spent on consumption but rather saved or invested.

Double Taxation

The imposition of taxes on the same income, assets, or financial transaction at two different levels of government, such as corporate income being taxed both to the corporation and to the shareholders when distributed as dividends.

Economic Growth

A rise in the production of goods and services per capita over a certain time frame.