In an open economy,where does the demand for loanable funds come from?
A)only from those who want to borrow funds to buy domestic capital goods
B)only from those who want to borrow funds to buy foreign assets
C)from those who want to borrow funds to buy either domestic capital goods or foreign assets
D)from those who want to borrow funds to buy Canadian bonds or shares of stock in Canadian companies

Question

Quizplus · Accepted Answer

In an open economy, the demand for loanable funds can come from both those who want to borrow funds to buy domestic capital goods and those who want to borrow funds to buy foreign assets. This is because people may choose to invest in both domestic and foreign markets, creating demand for loanable funds in both areas.

In an Open Economy,where Does the Demand for Loanable Funds