Assume that Canada has a comparative advantage in wheat and a comparative disadvantage in autos.As the Canadian demand for wheat increases, Canada's equilibrium terms of trade improves.

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An increase in domestic demand for wheat in Canada would likely lead to an increase in domestic prices for wheat, making Canadian wheat more expensive on the international market. This could worsen Canada's terms of trade, as it would have to give up more of its wheat (or other goods) to obtain the same amount of autos (or other imports) from abroad. Comparative advantage affects production decisions, not terms of trade directly in this context.

Assume That Canada Has a Comparative Advantage in Wheat and a Comparative