Asked by Sarah Elizabeth on Jun 23, 2024
Verified
The purchase of a capital asset adds to the demand for loanable funds only if that asset is a domestic one.
Capital Asset
A long-term asset such as equipment, real estate, or machinery that a company uses in its operations to generate wealth.
Loanable Funds
The market where savers provide funds to borrowers, usually influencing interest rates.
- Understand the origins of supply and demand for loanable funds in an open economy.
Verified Answer
AC
Anahi CerdaJun 24, 2024
Final Answer :
False
Explanation :
The purchase of a capital asset adds to the demand for loanable funds regardless of whether the asset is domestic or foreign, as it involves spending that requires financing.
Learning Objectives
- Understand the origins of supply and demand for loanable funds in an open economy.