During the 1970s,Canadian Prices Generally Rose Faster Than Prices in Other

question 23

Multiple Choice

During the 1970s,Canadian prices generally rose faster than prices in other parts of the world.What change would the open economy effect have predicted took place in response to these price level changes?

• A)Canadians reduced the fraction of purchases they made from domestic producers of goods and services, since foreign prices became relatively lower.
• B)Canadians reduced the amount of goods and services they wanted to purchase for consumption, because they felt less wealthy.
• C)Canadians reduced the proportion of foreign goods bought, since their foreign prices became relatively lower.
• D)Canadians reduced the amount of investment they undertook, because interest rates increased.

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