What must balance each other in an economy for it to be in equilibrium?

Net exports and net capital outflow.

Government spending and private consumption.

Total imports and total exports.

Total savings and total investment.

What does the term "capital formation" refer to?

The process of increasing foreign investment.

The process of increasing the money supply in an economy.

The process of increasing the productive capacity of an economy by adding to the stock of capital goods.

The process of increasing government spending on infrastructure.

Which of the following best defines an open economy?

An economy that does not interact with other economies in the world.

An economy that buys and sells only domestic goods and services.

An economy that interacts freely with other economies around the world.

An economy that has a fixed exchange rate.

Net exports (NX) refer to:

The value of a nation's imports minus the value of its exports.

The value of a nation's exports minus the value of its imports.

The value of a nation's total production.

The value of foreign assets owned by domestic residents.

Which of the following factors affects net capital outflow (NCO)?

The tastes of consumers for domestic and foreign goods.

The policies of the government toward international trade.

The growth of income in the economy.

The costs of transporting goods within the country.

What is net capital outflow (NCO)?

The purchase of domestic assets by foreigners.

The value of a nation's total investment.

The value of a nation's imports minus the value of its exports.

The purchase of foreign assets by domestic residents minus the purchase of domestic assets by foreigners.

What is the relationship between net exports (NX) and net capital outflow (NCO)?

They are unrelated and do not affect each other.

They are inversely related, meaning if NX increases, NCO decreases.

They are directly related, meaning if NX increases, NCO also increases.

They are equal to each other at all times.

Which sector contributed the most to Gross Domestic Savings (GDS) in India by the end of 2004-05?

Agriculture, Forestry, and Fishing

What is the relationship between investment and capital formation?

Investment and capital formation are unrelated concepts.

Investment refers to the process of increasing capital formation.

Capital formation refers to the process of increasing investment.

Investment and capital formation are the same concepts.

Which factor affects the capacity to save in an economy?

The government's foreign policy.

The availability of foreign aid.

The level of per capita income.

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