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Homework answers / question archive / 1) In an open economy the supply of loanable funds comes from  national saving

1) In an open economy the supply of loanable funds comes from  national saving

Economics

1) In an open economy the supply of loanable funds comes from

 national saving. Demand comes from only domestic investment

 national saving. Demand comes from domestic investment and net capital outflow.

 only net capital outflow. Demand for loanable funds comes from national saving.

 domestic investment and net capital outflow. Demand for loanable funds comes from national saving.

2) Which list ranks assets from most to least liquid?

a. money market mutual funds, demand deposits, currency

b. currency, money market mutual funds, demand deposits

C. currency, demand deposits, money market mutual funds

d. demand deposits, money market mutual funds, currency

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Answer:

1.

national savings. Demand comes from domestic investment and net capital outflow.

because savings become part of the banking systems through deposits which are lend to the borrowers.

2.

Answer - Option C

Currency , demand deposits , money market mutual funds.

The currency is the most liquid form which is the cash in itself. After this comes the demand deposits which can be withdrawn easily anytime from the bank with no maturity period. After these come the mutual funds of money market which have a maturity of about less than 1 year.

Hence option C will be the correct order of liquidity in descending order.

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