Which statement could be prompted by an interest rate that is temporarily higher in Canada than in the rest of the world?
A) A Bahamian bank purchases a Canadian bond instead of the British bond it had considered purchasing.
B) Canadian firms decide, because interest rates are higher, to do more investment spending.
C) Cole, a Canadian resident, decides to spend his savings on a trip to Hawaii.
D) Canadian net capital outflow increases.

Question

Quizplus · Accepted Answer

Higher interest rates in Canada compared to the rest of the world make Canadian bonds more attractive to foreign investors, like the Bahamian bank, due to higher potential returns.

Which Statement Could Be Prompted by an Interest Rate That