Which of the Following Is True (Assume the Small Country

question 28

Multiple Choice

Which of the following is true (assume the small country case) ?

• A)With a quota, an increase in demand leads to a higher price and more imports.
• B)With a tariff, an increase in demand leads to a higher price and more imports.
• C)With either a tariff or a quota, an increase in demand leads to a higher price and more imports.
• D)None of the above are true.

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Definitions:

Balance of Trade Deficit

A Balance of Trade Deficit occurs when a country's imports of goods and services exceed its exports, indicating that more money is flowing out of the country to buy foreign goods than is coming in from the sale of domestic goods.

United States

A country in North America consisting of 50 states and a federal district, known for its significant economic and political influence globally.

China

A country in East Asia, the world's most populous nation, known for its significant influence in terms of culture, economy, and politics.

Managed Float

A currency exchange rate policy that allows a country's currency value to fluctuate in response to the foreign exchange market, but with central bank interventions to stabilize it when necessary.