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Case Interview Prep

Category - Economics

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The market for loanable funds is represented by the equation below. What does NCO stand for?
S = I + NCO

national credit output
national capital outflows
net credit output
net capital outflows

Explanation

Answer: D - NCO stands for net capital outflows.

Key Takeaway: At the equilibrium interest rate, the amount that people save is equal to the desired quantities of investment and the net capital outflows. NCO is the imbalance between the purchases and sales of capital assets.

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