What Does the Identity "Net Capital Outflow = Net Exports

question 19

Multiple Choice

What does the identity "net capital outflow = net exports" imply?

• A)The supply of dollars equals the demand in the foreign-currency market.
• B)National saving equals domestic investment.
• C)The volume of exports equals the volume of imports.
• D)Canadian investment abroad is equal to foreign investment in Canada.

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Definitions:

Confirmation Error

A cognitive bias where individuals favor information that confirms their existing beliefs or hypotheses.

Representativeness Bias

A cognitive bias where individuals incorrectly assess the likelihood of an event based on how closely it resembles their stereotypes of a category.

Lack-of-participation Error

A common mistake in decision-making processes, where not all relevant parties are involved, leading to suboptimal outcomes.

Escalating Commitment

A behavioral phenomenon where an individual or group continues to invest in a decision despite evidence of its ineffectiveness.