Suppose the Canadian Price Level Rises Relative to Price Levels

question 21

Multiple Choice

Suppose the Canadian price level rises relative to price levels in other countries.How would Canada's consumption and exports be affected?  

• A) Consumption and net exports would decline. 
• B) Consumption and net exports would increase. 
• C) Consumption would increase and net exports would decrease. 
• D) Consumption would decrease and net exports would increase.

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Definitions:

Fixed Costs

Regular expenses that do not vary with the volume of production or sales, such as rent, salaries, and insurance premiums.

Capacity

The maximum amount or number that something can contain or accommodate.

Variable Costs

Costs that change in proportion to the level of production or sales volume.

Fixed Costs

Costs that do not vary with the level of output or activity, remaining constant over a period.