Suppose that Canada imposes an import quota on snow blowers. In the open-economy macroeconomic model, which curve would this quota shift?
A) supply of loanable funds left
B) demand for loanable funds left
C) demand for Canadian dollars right
D) supply of Canadian dollars left

Question

Quizplus · Accepted Answer

An import quota on snow blowers would reduce the supply of snow blowers in Canada from other countries, increasing the demand for domestically produced snow blowers. This would likely increase demand for Canadian dollars as foreign producers of snow blowers would need to exchange more of their currency into Canadian dollars to purchase Canadian goods, services, or assets, shifting the demand for Canadian dollars to the right.

Suppose That Canada Imposes an Import Quota on Snow Blowers