Final answer:
A country that invests less than it saves and runs a budget surplus will run a trade surplus, meaning that it will be a net lender internationally. This situation is depicted by the positive difference between national saving and domestic investment, reflected in a positive trade balance.
Step-by-step explanation:
When a country invests less than it saves and runs a budget surplus, it essentially means that there is an excess of saving over investment in the economy. This condition relates to the country's balance of payments, specifically the current account which encompasses the trade balance and net inflow of foreign saving. The budget surplus mentioned means that the government's revenues exceed its expenditures, contributing to national saving.
According to macroeconomic theory, for such an economy, national saving (S) is greater than domestic investment (I). In an open economy, S = I + NX, where NX represents the net exports or trade balance. If national saving exceeds domestic investment, then NX must be positive, indicating that the country is exporting more than it is importing, thus running a trade surplus.
Therefore, the correct choice among the provided options is: c. Run a trade surplus. As a result, the country will be a net lender to the rest of the world, as it lends its excess saving to foreign countries. This is reflected in a positive trade balance, where the value of exports is higher than the value of imports.
Contrastingly, a country with a large trade deficit that is borrowing heavily might face difficulties if the borrowed capital does not lead to increased productivity. This has been the case with some nations in Latin America and Africa in the 1970s and 1980s, which faced troubles repaying borrowed funds due to lack of growth in productivity and subsequent economic struggles.