Question

In a small open economy, if the world real interest rate is above the rate at which national saving equals domestic investment, then there will be a trade ______ and ______ net capital outflow.

Answer 1

In a small open economy, if the world real interest rate is above the rate at which national saving equals domestic investment, then there will be a trade deficit and positive / zero / negative net capital outflow.

The Department of Economic Affairs, Ministry of Finance, Government of India, oversees the National Savings Institute. The Institute is responsible for mobilizing deposits in the government of India's national savings schemes, which are run by selected banks and post offices across the nation. The Institute engages in a variety of activities for the promotion and mobilization of savings, including national-level promotion of the schemes, data collection and collation, inspection by the Department of Economic Affairs to assess whether small savings rules are being implemented by post offices and banks, liaison and coordination with the State Governments, Banks, Department of Posts, and Extension Agencies, and forecasting of collections for better cash flow.

Learn more about national savings here

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