If domestic saving exceeds domestic investment, what can be said about net exports and net capital outflows?

When domestic saving exceeds domestic investment, it indicates that the economy is saving more than it is investing. This scenario typically leads to an increase in net exports and net capital outflows.

Net exports, which represent the difference between a country's exports and imports, will be positive under these conditions. A higher level of saving suggests that the country is generating a surplus that can be used to finance investment abroad or to cover, through exports, an excess of domestic goods in relation to those consumed locally.

At the same time, net capital outflows, which reflect the net flow of capital that leaves a country for investment in foreign assets, will also be positive. When a country saves more than it invests domestically, the excess savings are often invested abroad, contributing to positive net capital outflows.

In summary, when domestic saving exceeds domestic investment, the result is typically a scenario where net exports are positive due to surplus production consumed externally, and net capital outflows are positive as these excess savings are used in overseas investments. Thus, this relationship is correctly captured in the designated answer choice.