According to the saving and investment equation,if net foreign investment falls by $35 million
A)national saving in excess of domestic investment will decrease by $35 million.
B)national savings will rise by $35 million.
C)domestic investment will fall by $35 million.
D)national saving in excess of domestic investment will rise by $35 million.

Question

Quizplus · Accepted Answer

The saving and investment equation in an open economy states that national saving equals domestic investment plus net foreign investment. If net foreign investment falls, it means there is less foreign capital available to fund domestic investment. Therefore, for the equation to balance, national saving in excess of domestic investment must decrease by the same amount, in this case, $35 million.

According to the Saving and Investment Equation,if Net Foreign Investment