If domestic saving is less than domestic investment, then net exports are ______ and net capital outflows are ______.
A) positive; positive
B) positive; negative
C) negative; negative
D) negative; positive

Question

Quizplus · Accepted Answer

When domestic saving is less than domestic investment, it implies that a country is importing capital to meet its investment needs, leading to negative net exports (trade deficit) and negative net capital outflows, as the country is a net borrower from the rest of the world.

If Domestic Saving Is Less Than Domestic Investment, Then Net