Which of the following would increase the current account balance of Canada?
A)an increase in imports
B)an increase in the amount of money Canadian government sends in foreign aid to other countries
C)an increase in the balance of trade
D)an increase in the amount of income Canadian companies pay out to foreigners who own investments in Canada
E)an increase in Canada's stock of intellectual capital (patents)

Question

Quizplus · Accepted Answer

An increase in the balance of trade means that the value of exports is greater than the value of imports, which would increase the current account balance.

Answer: D
 An increase in the amount of income Canadian companies pay out to foreigners who own investments in Canada would increase the outflow of money, which would decrease the current account balance. Therefore, this choice should not be selected.

Therefore, the best choice(s) is C only.

Which of the Following Would Increase the Current Account Balance