If domestic saving is less than investment in an open economy, the result is most likely to be:

Question

Quizplus · Accepted Answer

If domestic saving is less than investment in an open economy, it means that the country is borrowing from abroad to fund its investment. This leads to a current account deficit as the country is importing more than it is exporting, and therefore, there is a net outflow of goods and services. Since imports exceed exports, the country has to borrow capital from abroad to finance the current account deficit, which leads to a capital account surplus.

If Domestic Saving Is Less Than Investment in an Open