If an economy is closed and wishes to increase its investment spending:

Question

Quizplus · Accepted Answer

In a closed economy, the only sources of funding for investment spending are domestic saving (from households, firms, and the government). There is no foreign investment in a closed economy. Therefore, the only viable option for increasing investment spending is to increase domestic saving. This can be done through policies that encourage savings, such as tax incentives or higher interest rates. The government may also increase its own saving by reducing its spending or increasing its revenue through taxes, but this is not the only source of funding available.

If an Economy Is Closed and Wishes to Increase Its