In an open economy, savings can come from both domestic saving (building up its capital stock) and foreign saving (acquiring foreign wealth through trade surpluses or borrowing from abroad). Therefore, the correct option is D) can save either by building up its capital stock or by acquiring foreign wealth.

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An Open Economy

Question 22

Multiple Choice

An open economy

A) can save only by building up its capital stock.
B) can save only by acquiring foreign wealth.
C) cannot save either by building up its capital stock or by acquiring foreign wealth.
D) can save either by building up its capital stock or by acquiring foreign wealth.
E) can save by avoiding excessive imports.

Correct Answer: