Suppose That Canada Imposes Restrictions on the Importation of Textiles

question 68

Multiple Choice

Suppose that Canada imposes restrictions on the importation of textiles into Canada. According to the open-economy macroeconomic model, what would be the most likely result?

• A) This policy would lower the real exchange rate and increase net exports.
• B) This policy would lower the real exchange rate and have no effect on net exports.
• C) This policy would raise the real exchange rate and decrease net exports.
• D) This policy would raise the real exchange rate and have no effect on net exports.