Question

In an economy where net exports are zero, if saving rises in some period, then in that perioda.consumption rises and investment falls. b.consumption and investment fall. c.consumption falls and investment rises. d.consumption rises and investment falls.

Answer 1

Answer:

c. consumption falls and investment rises

Explanation:

• As there is a net drop in the net exports of the economy to near zero and the saving rises then the consumption will fall and there will be a rose in the investments.  

• It also is called as a closed economy and this also affects the net imports that remain in a negative number. And is direct contracts to the ope economy were the trade takes place to form the marginal exchange.