If the demand for Canadian dollars on foreign-exchange markets equals the supply of Canadian dollars on these markets, and if Canada has a surplus on its capital account, then:

Question

Quizplus · Accepted Answer

A surplus on the capital account implies that more capital is flowing into Canada than out. For the balance of payments to balance (since the demand equals supply of Canadian dollars), the current account must have a deficit to offset the capital account surplus.

If the Demand for Canadian Dollars on Foreign-Exchange Markets Equals