If domestic saving is less than domestic investment, then a country will have a trade deficit and positive net capital inflows.

Here's why:

1. Domestic saving less than domestic investment implies that the country is spending more on investment than it is saving. This means it is not generating enough funds internally to finance its investment projects.

2. To finance these projects, the country will need to borrow from other countries or sell its assets to foreign investors. This is referred to as capital inflow.

3. The country will have a trade deficit because it is importing more goods and services than it is exporting. This is because a part of the borrowed funds or funds received from the sale of assets will be used to pay for the import of goods and services.

4. The net capital inflow is positive because the country is receiving more funds from abroad than it is sending out. This is necessary to finance the domestic investment that is greater than the domestic saving.

Question

If domestic saving is less than domestic investment, then a country will have a trade deficit and positive net capital inflows.

Here's why:

1. Domestic saving less than domestic investment implies that the country is spending more on investment than it is saving. This means it is not generating enough funds internally to finance its investment projects.

2. To finance these projects, the country will need to borrow from other countries or sell its assets to foreign investors. This is referred to as capital inflow.

3. The country will have a trade deficit because it is importing more goods and services than it is exporting. This is because a part of the borrowed funds or funds received from the sale of assets will be used to pay for the import of goods and services.

4. The net capital inflow is positive because the country is receiving more funds from abroad than it is sending out. This is necessary to finance the domestic investment that is greater than the domestic saving.

Knowee AI · Accepted Answer

If domestic saving is less than domestic investment, then a country will have a trade deficit and positive net capital inflows.

Here's why:

1. Domestic saving less than domestic investment implies that the country is spending more on investment than it is saving. This means it is not generating enough funds internally to finance its investment projects.

2. To finance these projects, the country will need to borrow from other countries or sell its assets to foreign investors. This is referred to as capital inflow.

3. The country will have a trade deficit because it is importing more goods and services than it is exporting. This is because a part of the borrowed funds or funds received from the sale of assets will be used to pay for the import of goods and services.

4. The net capital inflow is positive because the country is receiving more funds from abroad than it is sending out. This is necessary to finance the domestic investment that is greater than the domestic saving.

If domestic saving is less than domestic investment, then a country will have a and net capital inflows.Group of answer choicesbalance on merchandise trade; zerotrade surplus; negativetrade deficit; positivetrade deficit; negative

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If domestic saving is less than domestic investment, then a country will have a __________ and __________ net capital inflows.Group of answer choicesbalance on merchandise trade; zerotrade surplus; negativetrade deficit; positivetrade deficit; negative

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If domestic saving is less than domestic investment, then a country will have a and net capital inflows.Group of answer choicesbalance on merchandise trade; zerotrade surplus; negativetrade deficit; positivetrade deficit; negative