Canada Is Both an Importer and an Exporter of Automobiles

question 52

Multiple Choice

Canada is both an importer and an exporter of automobiles.If Canada exports more automobiles than it imports,and the price of automobiles rises,then ceteris paribus,Canada's terms of trade will likely

• A)improve because the index of export prices would rise and the index of import prices would fall.
• B)remain the same because the index of export prices would rise by the same amount as the index of import prices.
• C)deteriorate because of the loss of exports that would result.
• D)deteriorate because the loss of exports would be more than offset by the gain in imports.
• E)improve because the index of export prices will rise more than the index of import prices.

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