Which one of the following will not directly affect Canada's balance on current account?
A)an increase in merchandise imports
B)an increase in capital outflows from Canada
C)a decrease in net investment income
D)an increase in imports of services

Question

Quizplus · Accepted Answer

Capital outflows do not directly affect Canada's balance on current account, which measures the flow of goods, services, and investment income. Capital outflows, such as investments made by Canadians overseas, are recorded in the capital and financial account. The other three choices all directly affect Canada's balance on current account: an increase in merchandise imports (A) results in a larger trade deficit, a decrease in net investment income (C) means that Canada is earning less from its foreign investments than foreigners are earning from their investments in Canada, and an increase in imports of services (D) increases the trade deficit in services.

Which One of the Following Will Not Directly Affect Canada's