In the open-economy macroeconomic model,equilibrium is determined by the equality between the supply of dollars which comes from
A)U.S.national saving and the demand for dollars for U.S.net exports.
B)U.S.net capital outflow and the demand for dollars for U.S.net exports.
C)domestic investment and the demand for U.S.net exports.
D)foreign demand for U.S.goods and U.S.demand for foreign goods.

Question

Quizplus · Accepted Answer

In the open-economy macroeconomic model, equilibrium is determined by the equality of supply and demand for dollars. The supply of dollars comes from U.S. net capital outflow, which is the difference between U.S. residents' investments abroad and foreign residents' investments in the U.S. The demand for dollars comes from U.S. net exports, which is the difference between U.S. exports and imports. Therefore, equilibrium is determined by the equality between U.S. net capital outflow and the demand for dollars for U.S. net exports.

In the Open-Economy Macroeconomic Model,equilibrium Is Determined by the Equality