What Are Some of the Economic Effects of a Tariff

question 105

Multiple Choice

What are some of the economic effects of a tariff?

• A) Wealth is redistributed from wealthy nations to poor nations and taxes fall.
• B) Unemployment and inflation rates both fall.
• C) Capital and labor are used less efficiently.
• D) Trade remains the same in the long run and GDP rises in the nation that enacts the tariff.

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Definitions:

Current Assets

Resources anticipated to be turned into cash, sold, or used up within a year or over the course of an operating cycle, depending on which period is greater.

Unearned Revenues

A liability recorded for cash received before services are performed.

Income Statement

A financial statement that shows a company's revenues and expenses, and ultimately its net income or loss, over a specific period.

Current Maturities

The portion of long-term debt or loan obligations that is due to be paid within the coming fiscal year.