If Canadian Citizens Decide to Save a Smaller Fraction of Their

question 34

Multiple Choice

If Canadian citizens decide to save a smaller fraction of their incomes, which statement would best describe the effects?

• A) Canadian domestic investment increases, and Canadian net capital outflow increases.
• B) Canadian domestic investment increases, and Canadian net capital outflow decreases.
• C) Canadian domestic investment decreases, and Canadian net capital outflow increases.
• D) Canadian domestic investment decreases, and Canadian net capital outflow decreases.

---

Definitions:

No-par Common Stock

Common stock issued without a par value which means it is not assigned a nominal or face value, but it still represents ownership in a company.

Stated Value

A nominal value assigned to a corporation's stock that bears no relation to its market price, used for calculating capital stock.

Par Preferred Stock

A type of preferred stock that has a nominal face value, which is the amount paid out to shareholders during liquidation before common stockholders.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, usually with dividends that are paid out prior to those to common stockholders.