Over the Long Run,protecting a Domestic Industry Using a High

question 45

Multiple Choice

Over the long run,protecting a domestic industry using a high tariff is likely to ________ new products and production methods,thus making it ________ to compete in the global marketplace.

• A)encourage it to develop; less able
• B)encourage it to develop; more able
• C)discourage it from developing; less able
• D)discourage it from developing; more able
• E)discourage it from developing; more focused on investing in its ability

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Definitions:

Coupon Bond

A type of bond that pays the holder a fixed interest rate (coupon) over the bond's life, with the principal repaid at maturity.

Interest-Rate Risk

The risk that an investment's value will change due to a change in the absolute level of interest rates.

Coupon Rate

The annual interest rate paid on a bond, expressed as a percentage of the face value, representing the income investors will receive.

Price Sensitivity

A measure of how the price of a product or service affects the demand for that product or service.