Question

If a country has positive net capital outflows, then its net exports are a. positive, and its saving is larger than its domestic investment. b. positive, and its saving is smaller than its domestic investment. c. negative, and its saving is larger than its domestic investment. d. negative, and its saving is smaller than its domestic investment.

Answer 1

Answer:

a. positive, and its saving is larger than its domestic investment.

Explanation:

Whenever a country has positive net capital outflows, then the net exports will be absolutely positive. Because, if a country has positive net exports, then the country has less number of imports as compare to the exports.

As country has to export its goods to other countries and bring back less amount of imports, and not have to invest its amount domestically inside its country because it already took goods from foreign. So here, we can say that OPTION(a) is correct.