In an Open Economy, Which of the Following Best Identifies

question 10

Multiple Choice

In an open economy, which of the following best identifies the sources of loanable funds?

• A)Canadians who consume less than their income and government budget deficit
• B)Canadians who consume less than their income and government budget surplus
• C)foreigners who buy Canadian bonds and stock and Canadian government surplus
• D)foreigners who invest in Canada and Canadian government surplus

---

Definitions:

Sustainable Growth Rate

The maximum rate at which a company can grow without needing to increase financial leverage.

Retention Ratio

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

ROA

Return on Assets, a financial ratio indicating how profitable a company is relative to its total assets, measuring how efficiently assets are utilized.

External Funding Requirement

The amount of money needed to be raised from external sources to finance the planned activities or investments of an organization or project.