Consider an open economy that is a net borrower (like the United States).What would be the impact of a shift to a closed economy?
A) domestic interest rates would decline
B) domestic savings would decline
C) domestic investment would decline
D) net borrowing would increase

Question

Quizplus · Accepted Answer

In a closed economy, there is no access to foreign capital, so domestic investment would decline as it would rely solely on domestic savings, which may not be sufficient to maintain previous levels of investment.

Consider an Open Economy That Is a Net Borrower (Like