If national saving increases, ________.(Assume that the capital account is zero and net transfers are zero.)
A)the sum of domestic investment and net exports must decrease
B)the sum of domestic investment and foreign investment must increase
C)the sum of domestic investment and foreign investment must decrease
D)foreign investment must decrease to cover the gain
E)domestic investment must increase

Question

Quizplus · Accepted Answer

When national saving increases, it means there is more available capital in the economy. Assuming the capital account is zero and net transfers are zero, this additional saving can be used for either domestic investment or foreign investment, leading to an increase in the sum of domestic and foreign investment.

If National Saving Increases, ________