In a large open economy, what is the source of the domestic supply of loanable funds?...
In a large open economy, what is the source of the domestic supply of loanable funds?
A. Net capital outflow
B. National saving and investment
C. National saving
D. Investment
Homework Answers
Savings is the source of supply of loan able funds. Supply comes from those who have extra money to save or lend out. This lending occurs directly such as the purchase of an asset or bond and hence high interest rate make saving more attractive. Hence, supply of loan able funds comes from national saving. Thus, the correct option is " C ".
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