Consider This Statement: "Canada Is Characterized by Perfect Capital Mobility

question 24

Multiple Choice

Consider this statement: "Canada is characterized by perfect capital mobility." Which of the following best explains what this statement means?

• A) that labour can easily move across Canada's borders
• B) that purchasing-power parity holds in Canada
• C) that Canada's net foreign investment is zero
• D) that investors' funds can easily move across Canada's borders

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Definitions:

External Financing Needed

The amount of funding a company must seek from outside sources to finance its business operations and growth ambitions beyond what it can generate internally.

Internal Rate of Growth

The maximum rate of growth a firm can achieve without resorting to external financing, relying solely on its own resources.

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.

Sustainable Growth Rate

The maximum rate at which a company can grow its sales, earnings, and dividends without increasing its financial leverage, relying solely on its internal resources.