A net capital inflow occurs in open economies where investment is:
A) higher than national savings.
B) lower than national savings.
C) equal to national savings.
D) higher than national spending.

Question

Quizplus · Accepted Answer

Net capital inflow occurs when a country receives more investment from foreign countries than it invests in foreign countries itself. This can only happen when the level of investment (outflow) is lower than national savings (inflow), as the surplus savings can be used to invest abroad. Therefore, the correct answer is A.

A Net Capital Inflow Occurs in Open Economies Where Investment