In a small open economy,if the world real interest rate is above the rate at which national saving exceeds domestic investment,then there will be a trade ______ and ______ net capital outflow.
A) surplus; negative
B) deficit; positive
C) surplus; positive
D) deficit; negative

Question

Quizplus · Accepted Answer

When the world real interest rate is above the rate at which national saving exceeds domestic investment, the economy will have a trade surplus because it saves more than it invests domestically, leading to positive net capital outflow as the excess savings are invested abroad.

In a Small Open Economy,if the World Real Interest Rate