Final answer:
When the world price is below the Canadian price, Canada will experience more imports and a domestic surplus, while exports will decrease and a shortage is unlikely to occur.
Step-by-step explanation:
When the world price for a product is below the Canadian price, Canada will experience A. More imports and D. A domestic surplus. These outcomes apply because the foreign price effect indicates that when domestic prices are higher relative to the world prices, Canadian products will be less competitive on the global market, leading to an increase in imports as foreign goods will be cheaper, and a surplus as Canadian goods go unsold domestically.
In contrast, option B, a domestic shortage, is typically not a result of high domestic prices compared to the world market. Instead, shortages may occur when the domestic price is too low to meet the demand or when there are supply constraints. Option C, more exports, does not apply either since Canadian goods will be relatively more expensive, negatively affecting the country's competitiveness in the global market and reducing the quantity of exports sold.