Suppose That the Real Return from Operating Factories in Australia

question 66

Multiple Choice

Suppose that the real return from operating factories in Australia rises relative to the real rate of return in Canada.What are the effects of this transaction?

• A) This will increase Canadian net capital outflow and decrease Australian net capital outflow.
• B) This will decrease Canadian net capital outflow and increase Australian net capital outflow.
• C) This will only affect Canadian net capital outflow.
• D) This will only affect Australian net capital outflow.

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Definitions:

Industry Supply Curve

A graphical representation that shows the quantity of goods that producers are willing and able to sell at different price levels in a specific industry.

Variable Costs

Costs that vary directly with the level of production, such as materials and labor.

Long Run

A period of time in economics during which all factors of production and costs are variable.

Apple Orchard

An agricultural area dedicated to the cultivation of apple trees for the purpose of producing apples.