MKT-4.B—Define national savings in both a closed and an open economy

Define national savings in both a closed and an open economy.

• In the absence of international borrowing and lending, national savings is the sum of public savings and private savings.
• For an open economy, investment equals national savings plus net capital inflow.
• Enduring understanding MKT-4: The interaction of borrowers, who demand loanable funds, and savers, who supply loanable funds, determines the equilibrium real interest rate.