Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 32 - Part XI - A Macroeconomic Theory of the Open Economy - Questions for Review - Page 702: 1

Answer

National saving provides the funds for the supply of loanable funds. Demand for loanable funds is derived from domestic investment and net capital outflows.

Work Step by Step

Net capital outflows supply the foreign-currency exchange. Demand for the foreign-currency exchange market is derived from net exports. Net capital outflow links the markets.
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