In the open-economy macroeconomic model, at the equilibrium real interest rate, the amount that people (including government) want to save equals desired quantities of domestic investment and net capital outflow.

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Business

Amaya Stokes

22 April, 19:34

In the open-economy macroeconomic model, at the equilibrium real interest rate, the amount that people (including government) want to save equals desired quantities of domestic investment and net capital outflow.

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Milo · Answer 1

True

Explanation:

Domestic investment refers to money investment in your own country.

Net capital outflow is the flow of funds being invested in a country, when the net capital outflow is negative, there exists more domestic investment than foreign investment in the economy.

savings = domestic investment + net capital outflow

If net capital outflow is positive, a portion of the country's savings will be invested in foreign companies. If the net capital outflow is negative, investment in domestic firms will be larger than investment in foreign firms, it may even include investments from other countries.