If There Is Capital Flight from Canada, How Does the Open-Economy

question 168

Multiple Choice

If there is capital flight from Canada, how does the open-economy macroeconomic model change?

• A) Both the supply of loanable funds and the supply of dollars for foreign exchange curves shift right.
• B) Both the supply of loanable funds and the supply of dollars for foreign exchange curves shift left.
• C) The supply of loanable funds shifts left, while the supply of dollars shifts right.
• D) The supply of loanable funds shifts right, while the supply of dollars shifts left.

---

Definitions:

Preference Shares

Preference shares are shares of a company's stock with dividends that are paid out to shareholders before common stock dividends are issued.

Ordinary Shares

Shares that have no specific rights to any distributions of profit by the company. Ordinary shareholders obtain what is left after all other parties’ claims have been met.

Liquidation

The process of converting assets into cash or paying off liabilities in order to close down a business.

Liquidations

The process of winding up a company's financial affairs by selling off assets to pay creditors and distribute any remaining assets to shareholders.