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Posted on Jul 08, 2024

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4 . Net capital outow and net exports An open economy interacts with the rest of the world through its involvement in world markets for goods and services and world nancial markets. Although it can often result in an imbalance in these markets, the following identity must remain true: Net Capital Outow 2 Net Exports In other words, if a transaction directly affects the left side of this equation, then it must also affect the right side. The following problem will help you understand why this identity must hold. Suppose you are a software engineer living in Canada, and you just sold your latest product to a Russian consumer for RUB 75,000. Determine the effects of this transaction on exports, imports, andI net exports in the Canadian economy, and enter your results in the foowing table. If the direction of change is "No change, " enter "0" in the Magnitude of Change cofumn. Hint: The magnitude of change should always be positive, regardless of the direction of change. Magnitude of Change Direction of Change (Rubles) Exports Imports Net Exports Because of the identity equation that relates to net exports, the in Canadian net exports is matched by in Canadian net capital outflow. Which of the following is an example of how Canada might be affected in this scenario? Check all that apply. O You buy RUB 7,000 worth of Russian bonds. You purchase RUB 7,000 worth of stock in a Russian corporation. O You store the rubles in your safety deposit box at home.Magnitude of Change Direction of Change (Rubies) Exports _. E Imports Decrease Increase Because of the ident at relates to net exports, the V in ND change net capital outow. ills-wing is an example of how Canada might be; Because of the identity equation that relates to net exports, the V in Canadian net exp0r13 is matched by V in Canadian increase net capital outow. which of the following is an example of how ht be affected in this scenario? Check all that apply. D You buy RUB 7,000 worth of Russian bonds. decrease D You purchase RUB 7,000 worth of stock in a Russian corporation. D You store the rubles in your safety deposit box at home. Because of the identity equation that relates to net exports, the in Canadian net exports is matched by in Canadian net capital outflow. Which of the following is an example of how Canada might be affected in this scenario? Check all th an increase O You buy RUB 7,000 worth of Russian bonds. a decrease You purchase RUB 7,000 worth of stock in a Russian corporation. O You store the rubles in your safety deposit box at home