In the open-economy macroeconomic model, the supply of loanable funds comes from

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Rephrasing the core idea helps set the stage: in the open-economy macroeconomic framework, the loanable funds market is driven by saving, because saving represents funds that are not consumed today and can be lent out or invested.
Option 1: national saving. This choice is correct because national saving (the sum of private saving and any government saving) determines the pool of funds available that can be lent to other countries or invested domestically. In open economies, even though foreigners can influence capital flows, the supply of loanable funds is ultimately the saving behavior of residents captured by national saving. This aligns with the standard interpretation of the loanable funds framework where the supply curve is tied to saving decisions rather than current income alone or other factors.
Why the other possibilities aren’t provided here: since there is no list of alternative options given in this question, there isn’t another choice to evaluate against. If an option like "private saving" or "public saving" alone appeared, you’d distinguish them by noting that the complete supply comes from national saving (private plus public), not just one component in isolation. In essence, without a different option set, the strongest and most comprehensive answer is national saving, reflecting the total funds available for lending from both private and government sectors.
In summary, the funds available to lend in the open economy come from saving across the economy, i.e., national saving, which aggregates private saving and government saving and determines the supply of loanable funds.

ECON 104, Section 001: Macroeconomic Analysis (SP25) Homework 10

In the open-economy macroeconomic model, the supply of loanable funds comes from

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Similar Questions

Consider the Loanable Funds Model: Which of the following is consistent with the graph depicted below?

The supply of loanable funds curve is ___ sloping because _ respond to lower interest rates by ___ their quantity supplied of loanable funds.

A decrease in household savings due to higher consumer spending will generally cause a _ the _for loanable funds.[Fill in the blank]

A policy that induces people to save more shifts a. the supply of loanable funds and raises interest rates. b. the supply of loanable funds and reduces interest rates. c. the demand for loanable funds and raises interest rates. d. the demand for loanable funds and reduces interest rates.

The figure above shows the loanable funds market. The equilibrium real interest rate is , and the equilibrium quantity of loanable funds is .

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ECON 104, Section 001: Macroeconomic Analysis (SP25) Homework 10

In the open-economy macroeconomic model, the supply of loanable funds comes from

View Explanation

Log in for full answers

Similar Questions

Consider the Loanable Funds Model: Which of the following is consistent with the graph depicted below?

The supply of loanable funds curve is _____ sloping because _____ respond to lower interest rates by _____ their quantity supplied of loanable funds.

A decrease in household savings due to higher consumer spending will generally cause a ___________ the ___________for loanable funds.[Fill in the blank]

A policy that induces people to save more shifts a. the supply of loanable funds and raises interest rates. b. the supply of loanable funds and reduces interest rates. c. the demand for loanable funds and raises interest rates. d. the demand for loanable funds and reduces interest rates.

The figure above shows the loanable funds market. The equilibrium real interest rate is ________, and the equilibrium quantity of loanable funds is ________.

More Practical Tools for Students Powered by AI Study Helper

Making Your Study Simpler

The supply of loanable funds curve is ___ sloping because _ respond to lower interest rates by ___ their quantity supplied of loanable funds.

A decrease in household savings due to higher consumer spending will generally cause a _ the _for loanable funds.[Fill in the blank]

The figure above shows the loanable funds market. The equilibrium real interest rate is , and the equilibrium quantity of loanable funds is .