If capital inflows into Canada decrease, it means that:
A) the supply of foreign currency on the Canadian foreign exchange market has fallen.
B) the demand for foreign currency on the Canadian foreign exchange market has fallen.
C) the supply of foreign currency on the Canadian foreign exchange market has increased.
D) none of the above because the trade in foreign currencies independent of capital inflows.

Question

Quizplus · Accepted Answer

When capital inflows into Canada decrease, it means there is less foreign investment coming into the country. This translates to a reduction in the supply of foreign currency on the Canadian foreign exchange market, as there are fewer foreign investors converting their currencies into Canadian dollars.

If Capital Inflows into Canada Decrease, It Means That