In the Open-Economy Macroeconomic Model, Where Does the Demand for Loanable

question 38

Multiple Choice

In the open-economy macroeconomic model, where does the demand for loanable funds come from?

• A) domestic investment
• B) net exports
• C) net capital outflow
• D) the sum of net capital outflow and domestic investment

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Definitions:

Compounded Annually

A method of calculating interest where the interest earned each year is added to the principal, so that the balance doesn't merely grow, it grows at an increasing rate.

Savings Account

A bank account where money can be deposited to earn interest over time.

Deposited

The act of placing money into a financial institution or account for safekeeping or to earn interest.

Present Amount

The present value of an anticipated amount of money or series of cash flows, assessed by a predetermined rate of return.