In an Open Economy, What Does the Market for Loanable

question 21

Multiple Choice

In an open economy, what does the market for loanable funds equate national saving with?

• A)domestic investment
• B)net capital outflow
• C)the sum of national consumption and government spending
• D)the sum of domestic investment and net capital outflow

---

Definitions:

Discount Period

The time period between when a bill is discounted and its maturity date; in finance, it often refers to the period for which a discount is applied to a cash flow.

Revolving Credit Agreement

A credit facility that allows a borrower to obtain multiple advances within a specified limit to finance short-term needs.

Committed Funds

Resources that are allocated or earmarked for a specific investment or project, often under formal agreement to ensure their availability over the commitment period.

Undercapitalized

A condition where a company does not have sufficient capital to conduct normal business operations effectively.