In a Small Open Economy, If Domestic Saving Exceeds Domestic

question 18

Multiple Choice

In a small open economy, if domestic saving exceeds domestic investment, then the extra saving will be used to:

• A)make loans to the domestic government.
• B)make loans to foreigners.
• C)repay the national debt.
• D)repay loans to the Bank of Canada.

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Definitions:

Financial Advantage

A benefit or edge gained in financial terms, such as lower costs, higher revenues, or investment returns, that contributes to better financial health.

Contribution Margin

The amount of revenue left after deducting all variable costs, indicating the contribution towards covering fixed costs and generating profit.

Fixed Expenses

Costs that do not change in total regardless of changes in the level of business activity.

Financial Advantage

The benefit or edge obtained by a business or individual that puts them in a better financial position than others.