In an open economy:

Question

In an open economy:

Quizplus · Accepted Answer

In an open economy, savings of foreigners could support investment spending through capital inflows. Therefore, choice B is the correct answer. Choice A is incorrect because a positive capital inflow does not necessarily mean that X (exports) will be greater than IM (imports). Choice C is also incorrect because capital inflows could be positive or negative depending on the situation. Choice D is incorrect because investment spending may not always equal national savings in an open economy.

In an Open Economy