Which of the following equations is true in an open economy?
A)Private saving = net foreign investment + domestic investment.
B)Domestic saving = net capital flows.
C)Net exports = -Financial account balance.
D)Net exports = net foreign investment.

Question

Quizplus · Accepted Answer

In an open economy, net exports are equal to net foreign investment, as net exports represent the difference between a country's savings and its investment, which is also reflected in the net foreign investment.

Which of the Following Equations Is True in an Open