The Effect of a Tariff on a Specific Imported Good

question 23

Multiple Choice

The effect of a tariff on a specific imported good on (domestic) consumer and producer surplus can be summarized as follows:

• A)consumer surplus and producer surplus are both decreased.
• B)consumer surplus is increased and producer surplus is decreased.
• C)consumer surplus is decreased and producer surplus is increased.
• D)there is no effect on either consumer or producer surplus.
• E)consumer surplus and producer surplus are both increased.

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Definitions:

Deposits Insured

A guarantee by a government or private entity that deposits in banks and financial institutions will be protected up to a certain limit in case of bank failure.

Banker's Lobbying

The efforts made by banks and financial institutions to influence lawmakers and regulators in favor of policies beneficial to their interests.

Subprime Mortgage

Mortgage for a borrower with a not-so-good credit rating.

Credit Rating

An assessment of the creditworthiness of a borrower in general terms or with respect to a particular debt or financial obligation.