The theory of reciprocal demand asserts that as the U.S.demand for Canadian wheat rises, the equilibrium terms of trade improves for the United States.

Question

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The theory of reciprocal demand suggests that as the U.S. demand for Canadian wheat rises, the equilibrium terms of trade would actually improve for Canada, not the United States, because the U.S. would be willing to offer more for the wheat, reflecting a higher demand.

The Theory of Reciprocal Demand Asserts That as the U