A Friend Claims That Canada Is a Net International Debtor

question 61

Multiple Choice

A friend claims that Canada is a net international debtor.The best way of testing this claim is to

• A)see whether Canadian foreign liabilities exceeded Canadian foreign income.
• B)see whether Canadian receipts from foreign assets exceeded Canadian payments to foreign owners of Canadian assets.
• C)see whether Canadian official reserve assets were positive or negative.
• D)see whether Canada ran a balance of payments surplus or deficit last year.

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Definitions:

Per-capita Income

The average income earned per person in a certain area, calculated by dividing the area's total income by its total population.

Rational Expectations School

An economic idea that assumes individuals make predictions about the future based on all available information and past experiences in a rational manner.

Monetary Policy

The process by which a central bank controls the supply of money in an economy, typically targeting inflation, employment, and economic growth.

Potential Level

The potential level of output, or potential GDP, is the maximum amount of goods and services an economy can produce when it is fully utilizing its resources, without causing inflation to rise.