In an open economy, the source of the demand for loanable funds is national saving. Hence option (c) is the answer.
Savings serve as the source of loanable money. Borrowing is the basis for the demand for loanable funds. Real interest rates and loan amounts are influenced by the interaction between the savings supply and loan demand. National savings are the source of loanable funds, whereas domestic investment and net capital outflow (NCE) are the sources of demand for loanable funds.
Both domestic and foreign residents are enticed to invest in American assets by an increase in real interest rates in the country. The demand for loanable funds in a nation will rise as its economy develops. However, domestic investment (I) and net foreign investment are now the two main sources of the demand for loanable funds.
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