If the world real interest rate exceeds the Canadian real interest rate, what would Canadian savers most likely do?

a.

Canadian savers would prefer to buy foreign assets.

b.

Canadian savers would prefer to buy Canadian assets.

c.

Canadian savers will prefer to wait until the two real interest rates are again equal.

d.

Canadian savers will sell their foreign assets and buy Canadian assets instead.

A firm in India sells jackets to a Canadian department store chain. Which of the following correctly identifies the effects of this transaction?

a.

It increases Canadian and Indian net exports.

b.

It decreases Canadian net exports and increases Indian net exports.

c.

It decreases Canadian and Indian net exports.

d.

It increases Canadian net exports and decreases Indian net exports.

What is the value of Peru's exports minus the value of Peru's imports called?

a.

Peru's net exports

b.

Peru's net imports

c.

Peru's net capital inflow

d.

Peru's foreign direct investment

What economic concept is the most relevant when defining comparative advantage?

a.

opportunity cost

b.

efficiency

c.

sunk cost

d.

scarcity

If the Canadian real exchange rate appreciates, which of the following will most likely happen?

a.

Exports increase and imports decrease.

b.

Exports decrease and imports increase.

c.

Exports and imports both increase.

d.

Exports and imports both decrease.

Suppose Judy, a Canadian citizen, opens an ice cream store in Bermuda. Which of the following would her expenditures be?

a.

Canadian foreign direct investment that would decrease Canadian net capital outflow

b.

Canadian foreign portfolio investment that would increase Canadian net capital outflow

c.

Canadian foreign portfolio investment that would decrease Canadian net capital outflow

d.

Canadian foreign direct investment that would increase Canadian net capital outflow

Tony, a Canadian citizen, uses some previously obtained Portuguese currency (escudo) to purchase a bond issued by a Portuguese company. How does this transaction affect Canadian net capital outflow?

a.

It decreases Canadian net capital outflow.

b.

It does not change Canadian net capital outflow.

c.

It increases Canadian net capital outflow by the value of the bond.

d.

It increases Canadian net capital outflow by more than the value of the bond.

Roger lives in Iceland and purchases a snowmobile manufactured in Canada. Which of the following is this purchase?

a.

both a Canadian and an Icelandic export

b.

a Canadian import and an Icelandic export

c.

both a Canadian and an Icelandic import

d.

a Canadian export and an Icelandic import

A Canadian computer maker sells computers to a German firm. This company uses all of the revenues from this sale to purchase stock in a German company. What happens to Canadian net exports and net foreign investment due to these transactions?

a.

They will decrease Canadian net exports and will increase Canadian net foreign investment.

b.

They will increase both Canadian net exports and Canadian net foreign investment.

c.

They will increase Canadian net exports and will decrease Canadian net foreign investment.

d.

They will decrease both Canadian net exports and Canadian net foreign investment.