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Canada trades with the US. The volume of trade is rather large as Canadian exports to...

Canada trades with the US. The volume of trade is rather large as Canadian exports to the US amount for nearly one billion dollars a day. Canada runs a sizable trade surplus with the US (feel free to assume that Canadian goods exported to the US are normal goods). Given this information, a US recession will cause

Canada's exports to the US to decrease, resulting in reduced economic growth in Canada

Canada's imports fom the US to decrease causing reduced economic growth in Canada

Canada's consumption spending to increase in order to compensate for the reduced spending in the US.

Canada's investment spending to increase in order to compensate for the reduced spending in the US
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Answer #1

"A"

As Canada is exporting to US and have a surplus, a recession will decease the exports and shift the Canadian AD curve to the left causing a recession there are well. the answer is A.

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