Suppose Canada imposes an import quota on wine.Which statement best describes the most likely effects of this quota?
A) Canadian exports increase,and the dollar appreciates.
B) Canadian exports increase,and the dollar depreciates.
C) Canadian exports decrease,and the dollar appreciates.
D) Canadian exports decrease,and the dollar depreciates.

Question

Quizplus · Accepted Answer

An import quota on wine would likely lead to a decrease in Canadian exports as other countries may retaliate with their own trade barriers. This could lead to a reduced demand for Canadian dollars, causing the dollar to appreciate due to the reduced supply of Canadian goods in the international market.

Suppose Canada Imposes an Import Quota on Wine