In an Open Economy,a Decrease in the Pool of Funds

question 199

Multiple Choice

In an open economy,a decrease in the pool of funds available for gross investment can arise either from a(n) ________ in national saving,a(n) ________ in capital inflows,or a(n) ________ in capital outflows.

• A) increase;increase;increase
• B) decrease;decrease;increase
• C) increase;decrease;decrease
• D) decrease;decrease;decrease
• E) decrease;increase;increase

---

Definitions:

SML

The Security Market Line (SML) is a graphical representation of the Capital Asset Pricing Model (CAPM), showing the relationship between the expected return of investments and their risk as measured by beta.

Stable Equilibrium

A condition in which a system tends to return to its original state after a disturbance, indicating stability and balance.

Probabilities Of Loss

Probabilities of loss indicate the likelihood or risk of an investment resulting in a financial loss rather than a gain or profit.

Higher Returns

Earning more income on an investment relative to its cost, indicative of successful investments or strategies.