The Basic Difference in the Economic Effects of a Tariff

question 109

Multiple Choice

The basic difference in the economic effects of a tariff compared with a quota is that a

• A) quota reduces domestic consumption of the product, but a tariff does not.
• B) tariff allows imports to increase if demand increases, whereas a quota does not.
• C) tariff raises product prices, but a quota does not.
• D) quota raises product prices, but a tariff does not.

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Definitions:

Debtor's Estate

The total assets and liabilities of a debtor that are considered in the event of bankruptcy or for satisfying debts.

Creditors

Individuals or institutions to whom money is owed by debtors.

Unsecured Creditors

Creditors that lend money without taking collateral, meaning they do not have a claim on specific assets of the borrower in case of default.

Secured Creditors

Creditors who have a legal claim to specific assets of a debtor as collateral for the debt owed to them.