Suppose a Tariff Is Imposed on Avocados

question 167

Multiple Choice

Suppose a tariff is imposed on avocados. This has the effect of _____ the domestic price of avocados, as well as having the effect of _____ the imported price of avocados.

• A) increasing; decreasing
• B) decreasing; increasing
• C) decreasing; decreasing
• D) increasing; increasing

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Definitions:

Demand For Pounds

The desire or need for a given amount of a commodity, such as currency or weight, by consumers or businesses.

Appreciate

To increase in value or price over time.

Fix Exchange Rate

A government or central bank policy of setting the exchange rate of a currency relative to other currencies.

Dollar-Yen Foreign Exchange

The exchange rate between the U.S. dollar and the Japanese yen, indicating how much yen can be exchanged for one U.S. dollar in the foreign exchange markets.