A Canadian Computer Maker Sells Computers to a German Firm

question 74

Multiple Choice

A Canadian computer maker sells computers to a German firm. This company uses all of the revenues from this sale to purchase automobiles from German firms. Which of the following best describes the effects of these transactions?

• A)They will increase both Canadian net exports and Canadian net foreign investment.
• B)They will decrease both Canadian net exports and Canadian net foreign investment.
• C)They will increase Canadian net exports and will not affect Canadian net foreign investment.
• D)They will not affect Canadian net exports or Canadian net foreign investment.

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Definitions:

Insurance

A financial product sold by insurance companies to safeguard against the risk of financial losses, both big and small.

Reducing Risk

Strategies and actions taken to minimize potential losses or the likelihood of undesirable outcomes in investment, operational, and financial activities.

Demand Curve

A visual chart that illustrates the connection between a product's price and the amount of it consumers want to buy.

Stock Market

A marketplace where securities such as stocks and bonds are bought and sold.