Question

the first one it tells me it is wrong why? please need the ASAP

Attempt Categorize each transaction according to the Canadian account in which it belongs and the direction the money flows. Each item may be used more than once. Direction of flow An Australian company buys steel from a Canadian firm. Account sales and purchases of goods and services payment from foreigners The Bank of Canada buys $2 billion worth of euros. official asset sales and purchases official asset sales and purchases A Canadian-based mining company operating in Mexico earns profits. factor income payment from foreigners An English company purchases a Canadian confectionary manufacturer. private sales and purchases of assets payment from foreigners Answer Bank about in a privacy policy terms of use contact us help

Answer 1

The loanable funds model communicates that,other things being equal, capital will tend to flow from a countries with low real interest rate to countries with high real interest rate.

Explanation- high real interest rate means higher return on investment which act as an incentive to attract the foreign capital in the country.

International differences..................... due to variations in investment opportunities, whereas differences in supply of funds generally reflect differences in savings rate.

Explanation - if higher the domestic opportunities higher will be the demand for domestic loanable funds and vice versa. Whereas higher the savings rate higher will be the supply of loanable funds and vice versa.

Loanable funds model...........out of the country when domestic prices are greater than foreign prices.

Explanation- higer the price level means lower the real interest rate in the economy so as discussed earlier lower real interest rate lead to outflow of capital.