Questions: Identify the correct identity for the market for loanable funds in an open-economy macroeconomic model: In the open-economy macroeconomic model, the market for loanable funds identity can be written as S=1 S=I+NCO S+I=NCO none of the above are true.

The answer is the second one (B): \( \mathrm{S} = \mathrm{I} + \mathrm{NCO} \).

Explanation for each option:

1. \( \mathrm{S} = 1 \):

   • This statement is incorrect. In the context of the market for loanable funds, \( \mathrm{S} \) represents national savings, which is not a constant value of 1. It varies based on the economic conditions and policies.

2. \( \mathrm{S} = \mathrm{I} + \mathrm{NCO} \):

   • This is the correct identity. In an open-economy macroeconomic model, national savings (\( \mathrm{S} \)) is equal to domestic investment (\( \mathrm{I} \)) plus net capital outflow (\( \mathrm{NCO} \)). This relationship captures the idea that savings can be used for domestic investment or can flow abroad as net capital outflow.

3. \( \mathrm{S} + \mathrm{I} = \mathrm{NCO} \):

   • This statement is incorrect. The correct identity is \( \mathrm{S} = \mathrm{I} + \mathrm{NCO} \), not \( \mathrm{S} + \mathrm{I} = \mathrm{NCO} \).

4. None of the above are true:

   • This option is incorrect because the second option (\( \mathrm{S} = \mathrm{I} + \mathrm{NCO} \)) is true.

Summary: The correct identity for the market for loanable funds in an open-economy macroeconomic model is \( \mathrm{S} = \mathrm{I} + \mathrm{NCO} \). This identity reflects the relationship between national savings, domestic investment, and net capital outflow.