A decrease in capital outflows from Canada will
A)decrease the balance on the financial account.
B)increase the balance on the financial account.
C)increase the balance on the capital account.
D)decrease the balance on the current account.
E)increase the balance on the current account.

Question

Quizplus · Accepted Answer

Capital outflows refer to the movement of investments from the domestic economy to foreign economies. A decrease in capital outflows means that there will be a reduction in the amount of investment leaving the country, which will increase the balance on the financial account. This is because the financial account records all the flows of capital in and out of a country, and a decrease in capital outflows means that there is now a higher excess of capital inflows into Canada, leading to an increase in the balance on the financial account.

A Decrease in Capital Outflows from Canada Will