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Suppose Canada imposes high tariffs on Japanese automobiles. The intention is to make autos produced in...

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Economics

Suppose Canada imposes high tariffs on Japanese automobiles. Theintention is to make autos produced in Japan so expensive forCanadians to buy that they choose instead to purchase autosconstructed in Canada. Advocates of the policy contend this willcreate new employment in Canada. Assuming the Bank of Canadamaintains a flexible exchange rate, will this trade policy proveeffective? Explain thoroughly. What if the Bank of Canada maintainsa fixed exchange rate, how would be your answer? Explainthoroughly.

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Canada imposes high tariff on Japanese automobiles So if the Canadians want to import machinery from Japan they will have to shell out more money and they will opt for cheaper local brands instead of spending more on imported ones So suppose Canadian automobile now costs 100 whereas    See Answer
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