What Happens When Two Countries Apply Tariffs Against Each

question 19

Multiple Choice

What happens when two countries apply tariffs against each
Other in an attempt to capture their terms­of­trade gain?

• A)Both countries lose because the terms­of­trade gain for one country is canceled by the tariff in the other country.
• B)Both countries gain because the terms­of­trade gain for one country is canceled by the tariff in the other country.
• C)Neither country gains nor loses because the terms­of­trade gain for one country is canceled by the tariff in the other country.
• D)The country initially applying the tariff gains because it captures the terms­of­trade gain; the other country neither gains
• Nor loses.

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Definitions:

Welfare Programs

Governmental provisions designed to improve individuals' quality of life, often targeted at the needy.

Illegitimate Births

Births occurring outside of a legally or socially recognized union, often referred to in the context of discussions on social and family dynamics.

Negative Income Tax

A system of income support that provides direct financial assistance from the government to individuals whose income falls below a certain level, effectively subsidizing their income.

Negative Income Tax

A system of income support that supplements the income of individuals whose earnings are below a certain level, effectively a form of guaranteed minimum income.