Martin, a Canadian citizen, uses some previously obtained Lithuanian currency (litas) to purchase a bond issued by a Lithuanian company. How does this transaction affect Canadian net capital outflow?
A) It increases Canadian net capital outflow by more than the value of the bond.
B) It increases Canadian net capital outflow by the value of the bond.
C) It does not change Canadian net capital outflow.
D) It decreases Canadian net capital outflow.

Question

Quizplus · Accepted Answer

Using previously obtained Lithuanian currency to purchase a bond does not involve a new flow of funds out of Canada, so it does not affect Canadian net capital outflow.

Martin, a Canadian Citizen, Uses Some Previously Obtained Lithuanian Currency