In an Open Economy, an Increase in National Saving _______

question 55

Multiple Choice

In an open economy, an increase in national saving _______ the equilibrium domestic real interest rate and the quantity of net capital inflows _____ and the quantity of domestic investment ______.

• A)increases; increases; increases
• B)increases; increases; decreases
• C)increases; decreases; decreases
• D)decreases; decreases; increases

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Definitions:

Bushel

A unit of volume that is used primarily in the United States to measure agricultural commodities, equivalent to approximately 35.24 liters.

Comparative Advantage

The ability of an individual, company, or country to produce a good or service at a lower opportunity cost than competitors, enabling beneficial trade.

Absolute Advantage

The capacity of a nation, individual, organization, or area to generate a product or offer a service at a cost per unit that is less than what any other party can produce that same good or service for.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, representing the benefits an individual, investor, or business misses out on when choosing one option over another.