Answer to Question #122123 in Macroeconomics for chiedza nyaruviro

Question

An increase in private savings which is accompanied by an equivalent increase in exports would increase the domestic investment. True or false? Explain

Answer 1

It's true

Private savings equal to the sum of household and business savings. And, savings from private sector plus from public sector are equal to national savings. They represent the domestic supply of loanable funds in a country. Hence, high savings means more money for investment in the economy. and also the equivalent increase in exports will increase more money supply in an economy which will increase expenditure and more savings hence increased domestic investment.