Assume That Canada Places a Strict Quota on Goods Imported

Multiple Choice

Assume that Canada places a strict quota on goods imported from the U.S. and that the U.S. does not retaliate. Holding other factors constant, this event should immediately cause the supply of Canadian dollars to be exchanged for U.S. dollars to ____ and the value of the Canadian dollar to ____.

A) increase; increase
B) increase; decline
C) decline; decline
D) decline; increase