Bolivia buys railroad engines from a Canadian firm and pays for them with Bolivianos (Bolivian currency).What happens to Canadian net exports and net foreign investment due to this transaction?
A)It increases both Canadian net exports and Canadian net foreign investment.
B)It decreases both Canadian net exports and Canadian net foreign investment.
C)It increases Canadian net exports and decreases Canadian net foreign investment.
D)It decreases Canadian net exports and increases Canadian net foreign investment.

Question

Quizplus · Accepted Answer

The transaction increases Canadian net exports because Canada is exporting railroad engines to Bolivia. It also increases Canadian net foreign investment because Bolivia is paying for the engines with Bolivianos, which are a foreign currency.

Bolivia Buys Railroad Engines from a Canadian Firm and Pays