In the open-economy macroeconomic model, the market for loanable funds identity can be written as

Question

a. S + I = NCO.
b. S = NCO.
c. S = I + NCO.
d. S = I.

Answer 1

In the open-economy macroeconomic model, the identity for the market for loanable funds is expressed as:

c. S = I + NCO.

This identity states that the total savings (S) in an economy is equal to the sum of domestic investment (I) and net capital outflow (NCO), which represents the net flow of funds being invested abroad.