What Is the Effect of an Increase in the Canadian

question 10

Multiple Choice

What is the effect of an increase in the Canadian real interest rate above the world interest rate?

• A) Canadians buy more foreign assets, which increases Canadian net capital outflow.
• B) Canadians buy more foreign assets, which reduces Canadian net capital outflow.
• C) Foreigners buy more Canadian assets, which reduces Canadian net capital outflow.
• D) Foreigners buy more Canadian assets, which increases Canadian net capital outflow.