If Canada imposes a tariff on imports, Canada's
A) terms of trade will improve and volume of imports will decrease.
B) terms of trade will worsen and volume of imports will decrease.
C) terms of trade will improve and volume of imports will increase.
D) terms of trade will worsen and volume of imports will increase.

Question

Quizplus · Accepted Answer

Imposing a tariff generally improves a country's terms of trade because it can now buy more foreign goods for any given amount of exports. Additionally, the tariff makes imported goods more expensive, leading to a decrease in the volume of imports as domestic consumers switch to locally produced alternatives or reduce consumption.

If Canada Imposes a Tariff on Imports, Canada's