Assume the Canadian Demand Elasticity for Imports Equals 0

Multiple Choice

Assume the Canadian demand elasticity for imports equals 0.2, while the foreign demand elasticity for Canadian exports equals 0.3.Responding to a trade deficit, suppose the Canadian dollar depreciates by 20 percent.Other things equal, for Canada, the depreciation would lead to

A) a worsening trade balance-a larger deficit.
B) an improving trade balance-a smaller deficit.
C) an unchanged trade balance.
D) None of these are correct.