If net foreign investment in Canada is negative, how must national saving and domestic investment be related?
A)Domestic investment and national saving must also be negative.
B)Domestic investment must be greater than national saving.
C)Domestic investment must be less than national saving.
D)Domestic investment can be greater than or less than national saving.
E)Domestic investment is always unrelated to national saving.

Question

Quizplus · Accepted Answer

When net foreign investment in Canada is negative, it means that the country is investing more abroad than what is being invested within the country from abroad. This scenario implies that domestic investment must be greater than national saving, as the excess domestic investment is financed by borrowing from abroad or running down reserves.

If Net Foreign Investment in Canada Is Negative, How Must