A citizen of Saudi Arabia uses previously obtained Canadian dollars to purchase lamb from Canada. What are the effects of this transaction?

Question

Quizplus · Accepted Answer

This transaction increases Canadian net exports because Canada is exporting goods (lamb) to Saudi Arabia. It decreases Saudi net capital outflow because the Saudi citizen is using previously obtained Canadian dollars, not engaging in a new capital outflow to acquire the currency for the transaction.

A Citizen of Saudi Arabia Uses Previously Obtained Canadian Dollars