Why Doesn't Canada Grow Its Own Bananas

question 106

Multiple Choice

Why doesn't Canada grow its own bananas?

• A)It is not possible to grow bananas in Canada.
• B)Canada's factor endowments suggest that it can better produce many other goods besides bananas.
• C)It is cheaper to buy bananas from countries that have different factor endowments which are much better suited to growing bananas.
• D)Both b)and c).

---

Definitions:

Exchange Rate System

The method by which the value of one currency is fixed or determined in relation to other currencies, such as through floating or fixed exchange rate regimes.

Industrially Advanced Nations

Countries that have highly developed industries and infrastructure, often characterized by high levels of income, technological innovation, and standard of living.

Managed Float

A currency exchange rate policy where the central bank allows the currency value to fluctuate in the foreign exchange market but intervenes to prevent excessive movements.

Fixed Rate System

A monetary system in which exchange rates are set and maintained at a certain level by a government or central bank.