The level of saving in Canada has historically been low relative to the level of domestic investment.Based on this information, we would expect that
A)Canadian net foreign investment has been relatively high.
B)Canadian net exports have been relatively low.
C)Canadian capital inflows are negative.
D)Canadian private saving is less than its public saving.
E)Canadian public savings has been low.

Question

Quizplus · Accepted Answer

The low level of saving in Canada relative to domestic investment implies that there is less money available for investment within the country. As a result, we would expect that Canada is relying on external sources of investment, which would lead to a relatively high level of net foreign investment. However, the question is asking about net exports (which is different from net foreign investment). Net exports refer to the difference between a country's exports and imports, and this would not necessarily be affected by the level of domestic saving. Therefore, B is the best answer because it is the only option that is logically consistent with the information given in the question.

The Level of Saving in Canada Has Historically Been Low