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In an open economy, the source of the demand for loanable funds is

A. national saving + net capital outflow
B. national saving
C. investment + net capital outflow
D. investment + the government budget deficit

Sagot :

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Final answer:

The source of demand for loanable funds in an open economy consists of national savings, net capital outflow, private sector investment, and government borrowing.


Explanation:

The source of the demand for loanable funds in an open economy is national saving + net capital outflow as both contribute to the availability of funds for borrowing.

Private sector investment and government borrowing separately contribute to the demand for loanable funds in the credit market.

National savings along with foreign investment also play a critical role in determining the availability of loanable funds.


Learn more about loanable funds in an open economy here:

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