Question

in the open-economy macroeconomic model, the purchase of a capital asset by domestic residents adds to the demand for loanable funds a. only if the asset is located at home. b. only if the asset is located abroad. c. whether the asset is located at home or abroad. d. none of the above is correct.

Answer 1

In the open-economy macroeconomic model, the purchase of a capital asset by domestic residents adds to the demand for loanable funds whether the asset is located at home or abroad. Therefore, the correct option is C.

Step-by-step explanation:

In the open-economy macroeconomic model, the purchase of a capital asset by domestic residents adds to the demand for loanable funds c. whether the asset is located at home or abroad.

In an open economy, the demand for loanable funds comes from both domestic and foreign residents. When domestic residents purchase a capital asset, they are essentially investing in the economy, which increases the demand for loanable funds.