Which of the Following Best Predicts the Effects of a Fall

question 183

Multiple Choice

Which of the following 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.

---

Definitions:

Forward Contracts

Financial derivatives involving an agreement to buy or sell an asset at a predetermined future date and price.

Commodity Prices

The market prices for raw materials or primary agricultural products that are traded on exchanges.

Exchange Rates

The value of one currency for the purpose of conversion to another, determining how much one currency is worth in terms of another.