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ECON 1BB3 (535)
Lecture

1BB3 March 5th

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Department
Economics
Course
ECON 1BB3
Professor
Bridget O' Shaughnessy
Semester
Winter

Description
Economics 1BB3 March 5 , 2013: (Start of Chapter 12) Net Exports (Trade balance): Exports – imports Exports: Goods and services that are produced domestically and sold abroad Imports: Goods and services that are produced abroad and sold domestically What affects the trade balance? Factors affecting the trade balance: 1. Tastes (Foreign/domestic goods) 2. Prices (Foreign/domestic goods) 3. Exchange Rates 4. Income (Foreign/domestic goods) 5. Transportation Costs 6. Government trade policies Question: Which industry is the largest in terms of Canadian exports? a) Energy Products b) Industrial goods and materials c) Machinery and equipment d) Automotive products e) Agricultural products Answer: C Net Capital outflow Net Capital Outflow (NCO): The purchase of the foreign assets by domestic residents minus the purchase of domestic assets by foreign residents -Net capital outflow is also called “net foreign investment” (NFI) What affects Net Capital Outflow? Factors affecting net capital outflow include: 1. Real interest rate on domestic/foreign a
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