Suppose That the Real Return from Operating Factories in Canada

question 8

Multiple Choice

Suppose that the real return from operating factories in Canada rises relative to the real rate of return in the United States.Other things the same,

• A)this will increases U.S.net capital outflow and decrease Canadian net capital outflow.
• B)this will decreases U.S.net capital outflow and increase Canadian net capital outflow.
• C)this will only increase U.S.net capital outflow.
• D)this will only increase Canadian net capital outflow.

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Definitions:

Retained Earnings Account

An equity account that represents the accumulated portion of net income not distributed to shareholders in the form of dividends.

Current Ratio

A financial liquidity metric that compares a company's current assets to its current liabilities, used to evaluate its ability to pay short-term obligations.

Temporary Accounts

Accounts that track revenues and expenses within a specific accounting period and are reset to zero at the period’s end.

Prepaid Rent

A type of asset account on the balance sheet that represents rent payments made in advance of the rental period.