Suppose That the Nominal Tariff Rate on Final Good X

question 17

Multiple Choice

Suppose that the nominal tariff rate on final good X is 7 percent and that the weighted average of the nominal tariff rates on the inputs used in producing good X is 10 percent. In this situation, the effective rate of protection (ERP) for final good industry X

• A) will be greater than 10 percent.
• B) will be less than 10 percent but must be greater than 7 percent.
• C) will be less than 7 percent but must be greater than 0 percent.
• D) can be negative.

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Definitions:

Interest in Land

Legal rights or investments in real property, including ownership or usage rights.

Main-Purpose Rule

A legal principle that if the main purpose of a guarantor to sign a surety agreement is to secure a personal benefit, the agreement does not have to be in writing to be enforceable.

Secondary Obligation

An obligation that arises indirectly or as a result of another primary obligation, often in legal or financial contexts.

Statute of Frauds

A legal concept that requires certain types of contracts to be written and signed to be enforceable.