The diagram below shows the domestic demand and supply curves for denim jeans in Canada.The prevailing world price is PW.Assume that all jeans are identical.
FIGURE 34- 2
-Consider the following statement: "With unemployment at its highest level in years,Canada needs to protect domestic jobs by promoting a "Buy Canadian" policy." This statement is because _ .
A) correct; a "Buy Canadian" policy will take advantage of Canada's comparative advantage
B) incorrect; it fails to recognize that imports of foreign goods also help to encourage the export of domestic goods
C) correct; it recognizes that such a policy can sustain high levels of domestic employment
D) incorrect; it confuses the real and nominal gains from trade
E) incorrect; it will work against Canada's pattern of absolute advantage
Correct Answer:
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Q1: The diagram below shows the domestic demand
Q2: The diagram below shows the domestic demand
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