In which situation must domestic saving equal investment?
A)in both closed and open economies
B)in closed economies, but not open economies
C)in open economies, but not closed economies
D)in neither closed nor open economies

Question

Quizplus · Accepted Answer

In a closed economy, there are no external trade or financial flows, so all savings must be used for domestic investment. In an open economy, savings can flow abroad, and investment can be financed by foreign savings.

In Which Situation Must Domestic Saving Equal Investment