Use the information below to answer the following questions.
Fact 31.3.1
Before 1995, trade between Canada and Mexico was subject to tariffs. In 1995, Mexico joined NAFTA and all Canadian and Mexican tariffs have gradually been removed.
-Refer to Fact 31.3.1. With the removal of the tariffs, the quantity of Canadian imports from Mexico ________ and the quantity of Canadian exports to Mexico ________.
A)increases; decreases
B)decreases; decreases
C)decreases; increases
D)increases; does not change
E)increases; increases

Question

Quizplus · Accepted Answer

With the removal of tariffs, it becomes easier and cheaper for Canada to import goods from Mexico, hence the quantity of Canadian imports from Mexico is likely to increase. Similarly, Mexican businesses can afford to buy more goods from Canada, making Canadian exports to Mexico increase as well. Therefore, the best choice is E, which indicates that the quantity of Canadian imports from Mexico and the quantity of Canadian exports to Mexico both increase.

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