The level of saving in Japan has historically been high relative to the level of domestic investment.Based on this information, we would expect that
A)Japan's net foreign investment has been relatively low.
B)Japan's net exports have been relatively high.
C)Japan's capital inflows are positive.
D)Japan's private saving is greater than its public saving.
E)Japan's public savings is greater than investment.

Question

Quizplus · Accepted Answer

When a country's level of saving is high relative to its level of domestic investment, it typically means that the excess savings are used to purchase foreign assets, leading to higher net exports. This is because the savings that are not used for domestic investment are often invested abroad, which corresponds to a financial outflow and contributes to a trade surplus, reflected in net exports.

The Level of Saving in Japan Has Historically Been High