Suppose that Canada imposes an import quota on automobiles.In the open-economy macroeconomic model,which of the following curves 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 automobiles would decrease the supply of foreign cars in Canada, increasing the demand for Canadian-made cars. This would result in an increase in demand for Canadian dollars as foreign consumers would need to exchange their currency for Canadian dollars to purchase the Canadian-made cars. Therefore, the demand for Canadian dollars would shift right.

Suppose That Canada Imposes an Import Quota on Automobiles