Suppose that the United States and Canada are the only trading partners in the world and the U.S. Congress passes more restrictive import policies. Assuming that the Canadian Parliament does not retaliate, what will happen to the U.S. balance of payments on the current account? All else equal, how will more restrictive import policies affect the U.S. balance of payments on the financial account? Explain the thinking behind your conclusions.

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The Answer of Suppose that the United States and Canada are the only trading partners in the world and the U.S. Congress passes more restrictive import policies. Assuming that the Canadian Parliament does not retaliate, what will happen to the U.S. balance of payments on the current account? All else equal, how will more restrictive import policies affect the U.S. balance of payments on the financial account? Explain the thinking behind your conclusions.

Suppose That the United States and Canada Are the Only