In Open Economies

question 41

Multiple Choice

In open economies

• A) saving and investment are necessarily equal.
• B) as in a closed economy, saving and investment are not necessarily equal.
• C) saving and investment are not necessarily equal as they are in a closed economy.
• D) saving and investment are necessarily equal contrary to the case of a closed economy.
• E) investment always refers to the domestic stock market.

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Definitions:

Cash Flow

This refers to the movement of money into and out of a business, and is critical for assessing the liquidity and operational efficiency of the company.

Discount Rate

The rate of interest that is utilized in a DCF analysis for calculating the current value of anticipated cash flows.

NPV

Net Present Value is a method used in capital budgeting to evaluate the profitability of an investment or project by calculating the difference between the present value of cash inflows and the present value of cash outflows.

Contracts

Legal agreements between two or more parties that are enforceable by law, outlining responsibilities, duties, and sharing of benefits.