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Assume That Canada Initially Faces Payments Equilibrium in Its Merchandise

Question 72

Multiple Choice

Assume that Canada initially faces payments equilibrium in its merchandise trade account as well as in its capital and financial account.Now suppose that Canadian interest rates increase to levels higher than those abroad.For Canada,this tends to promote:


A) Net financial inflows
B) Net financial outflows
C) Net merchandise exports
D) Net merchandise imports

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