Question

In an open economy, national saving equals a. domestic investment. b. domestic investment plus net capital outflow. c. domestic investment minus net capital outflow. d. net capital outflow.

Answer 1

In an open economy, national saving equals to domestic investment and net capital outflow

Explanation:

In an open economy national saving as considered or calculated an equal to the domestic investment and net capital outflow.

The savings saved by the households are generally deposited in the the banks accounts and banks use this amount to give loans to the business organisation and they make money from these loans.

Apart from this, countries also invests in the other foreign countries which is also considered as domestic (national) saving.