The large,positive net capital outflow in Canada after 1999 is primarily the result of government budget surpluses.

Question

Quizplus · Accepted Answer

When a country has a current account deficit (importing more than exporting), it can be funded by a net capital inflow (borrowing or investment from foreign sources). Likewise, a current account surplus (exporting more than importing) can result in a net capital outflow (investment or lending to foreign sources). In the case of Canada, its government budget surpluses provided an incentive for domestic investors to seek investment opportunities abroad, resulting in a large net capital outflow. Therefore, the statement is true.

The Large,positive Net Capital Outflow in Canada After 1999 Is