Jill, a Canadian citizen, uses some previously obtained euros to purchase a bond issued by a French vineyard. 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

Using previously obtained euros means Jill is not converting Canadian dollars to make the purchase, thus the transaction does not affect Canada's financial account, keeping the net capital outflow unchanged.

Jill, a Canadian Citizen, Uses Some Previously Obtained Euros to Purchase