Tony, a Canadian citizen, uses some previously obtained Portuguese currency (escudo) to purchase a bond issued by a Portuguese company. How does this transaction affect Canadian net capital outflow?
A)It increases Canadian net capital outflow by more than the value of the bond.
B)It increases Canadian net capital outflow by the value of the bond.
C)It does not change Canadian net capital outflow.
D)It decreases Canadian net capital outflow.

Question

Quizplus · Accepted Answer

The transaction does not change Canadian net capital outflow because Tony is using previously obtained foreign currency, not exchanging Canadian dollars for foreign currency.

Tony, a Canadian Citizen, Uses Some Previously Obtained Portuguese Currency