The accompanying diagram shows Canadian-owned assets abroad and foreign-owned assets in Canada, both as a percentage of Canada€™s GDP. As you can see from the diagram, both have trended upward from 1981 to 2011, especially Canadian-owned assets abroad.

a. Since Canadian-owned assets abroad increased as a percentage of GDP, does this mean that Canada, over the period, experienced net capital outflows?

b. Compare the net capital flows in in the early 1980s to the net capital flows in the late 2000s. Did the net capital flows increase or decrease? Why?

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Percent of rest-of-the-world GDP Foreign-owned assets in the United States 35% 30 25 20 15 U.S.-owned assets abroad 10 Year Data from: IMF; Bureau of Economic Analysis. 1980 1985 1990 1995 2000 2005 2010 2016