Suppose Judy, a Canadian citizen, opens an ice cream store in Bermuda. Which of the following would her expenditures be?
A)Canadian foreign portfolio investment that would increase Canadian net capital outflow
B)Canadian foreign portfolio investment that would decrease Canadian net capital outflow
C)Canadian foreign direct investment that would increase Canadian net capital outflow
D)Canadian foreign direct investment that would decrease Canadian net capital outflow

Question

Quizplus · Accepted Answer

Judy's act of opening an ice cream store in Bermuda constitutes foreign direct investment because she is establishing a business that will operate within the Bermuda economy. This means that her expenditures will be categorized as Canadian foreign direct investment that would increase Canadian net capital outflow.

Suppose Judy, a Canadian Citizen, Opens an Ice Cream Store