Homework Help is Here – Start Your Trial Now!
Business
Economics
Canada is an open economy that interacts with the rest of the world through its involvement in world markets for goods and services and world financial markets. Although it can often result in an imbalance in these markets, Net capital outflow = Net Export

Canada is an open economy that interacts with the rest of the world through its involvement in world markets for goods and services and world financial markets. Although it can often result in an imbalance in these markets, Net capital outflow = Net Export

Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter31: Open-Economy Macroeconomics: Basic Concepts
Section: Chapter Questions
Problem 4PA
See similar textbooks
icon
Related questions
Question

Pls help

Canada is an open economy that interacts with the rest of the world through its involvement in world markets for goods and services and world financial markets. Although it can often result in an imbalance in these markets, Net capital outflow = Net Export Suppose you are the purchasing manager for a large chain of restaurants in Canada, and you need to make your semiannual purchase of tea. You pay $1,500,000 for a shipment of tea from an Indian tea producer resulting in a decrease in net exports. Which of the following is an example of how Canada might be affected in this scenario? Select one: O a. The Indian tea producer hangs on to the $1,500,000 so that it can use the Canadian dollars to make investments. O b. The Indian tea producer purchases $1,500,000 worth of stock spread out over a few Canadian companies. Canada sells $1,500,000 worth of bonds to the Indian tea producer. O d. All of the above are examples of how Canada might be affected.
Transcribed Image Text:Canada is an open economy that interacts with the rest of the world through its involvement in world markets for goods and services and world financial markets. Although it can often result in an imbalance in these markets, Net capital outflow = Net Export Suppose you are the purchasing manager for a large chain of restaurants in Canada, and you need to make your semiannual purchase of tea. You pay $1,500,000 for a shipment of tea from an Indian tea producer resulting in a decrease in net exports. Which of the following is an example of how Canada might be affected in this scenario? Select one: O a. The Indian tea producer hangs on to the $1,500,000 so that it can use the Canadian dollars to make investments. O b. The Indian tea producer purchases $1,500,000 worth of stock spread out over a few Canadian companies. Canada sells $1,500,000 worth of bonds to the Indian tea producer. O d. All of the above are examples of how Canada might be affected.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Comparative Advantage
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Macroeconomics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:
9781305971509
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Macroeconomics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:
9781285165912
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou…
Principles of Economics, 7th Edition (MindTap Cou…
Economics
ISBN:
9781285165875
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours…
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Principles of Economics 2e
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
SEE MORE TEXTBOOKS