In an open economy,

Question

In an open economy,

Quizplus · Accepted Answer

In an open economy, the goods market reaches equilibrium when the amount a country wants to lend internationally (or invest abroad) equals the amount it wants to borrow from other countries. This reflects the balance between a country's savings and its domestic plus foreign investment needs. Choices A, B, and C do not accurately describe the equilibrium condition in an open economy's goods market or the relationship between domestic and world real interest rates, which tend to equalize due to capital mobility.

In an Open Economy