A Tariff Disrupts the Workings of the Law of One

question 73

Multiple Choice

A tariff disrupts the workings of the law of one price because tariffs:

• A) are standardized by GATT.
• B) are taxes on imports and can vary across products and countries.
• C) apply only to goods countries export.
• D) are only applied to commodity products.

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Definitions:

Political Risk

The risk of losses due to political instability or changes in government policy that can affect investment values or business operations.

Foreign Direct Investment

An investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country.

Reputational Risk

The potential of losing stakeholder trust or diminishing brand value due to negative public opinion.

Valuation Risk

The potential for loss that arises from inaccuracies or errors in assessing the value of assets, liabilities, or investments.