The Main Difference Between a Tariff and an "Equivalent" Voluntary

question 103

Multiple Choice

The main difference between a tariff and an "equivalent" voluntary export restriction (VER) is that

• A)a tariff restricts free trade between two countries and a VER does not.
• B)a tariff allows the extra market value of the good to accrue to the supplier, but a VER allows the extra market value to be appropriated by the government of the importing country.
• C)a tariff keeps the price in the importing country higher than it would otherwise be; a VER does not.
• D)a tariff allows the importing country to protect wages and other factor incomes in the affected industry, while a VER does not.
• E)a tariff allows the government of the importing country to appropriate the extra market value of the imported good, but with a VER the extra market value accrues to the good's producers.

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Definitions:

Upsloping

Referring to a line or curve that ascends or increases in height as it moves from left to right on a graph.

U.S. Dollars

The currency of the United States, widely used as a benchmark and reserve currency around the world.

Currency Market

Also known as the foreign exchange market, it's a global decentralized market for the trading of currencies.

Supply of British Pounds

The total amount of British pounds (GBP) available for transactions and investment in the currency markets.