Which Statement Best Predicts the Effects of a Fall in the Canadian

question 26

Multiple Choice

Which statement best predicts the effects of a fall in the Canadian real interest rate?

• A) Owning Canadian assets becomes less attractive, and net capital outflow rises.
• B) Owning Canadian assets becomes less attractive, and net capital outflow falls.
• C) Owning Canadian assets becomes more attractive, and net capital outflow rises.
• D) Owning Canadian assets becomes more attractive, and net capital outflow falls.

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Definitions:

Supply

The total amount of a specific good or service that is available to consumers at a particular price level.

Demand

The amount of a product or service that buyers are prepared and capable of buying at different price levels over a specified time frame.

Consumption

The use of goods and services by households or individuals, which is a primary component of economic activity.

Income

The financial money received, especially on a regular basis, for work, through investments, or from business activities.