How Do High Tariffs and Other Restraints on International Trade

question 103

Multiple Choice

How do high tariffs and other restraints on international trade affect a nation's prosperity?

• A) They increase employment and thereby promote the growth of real GDP.
• B) They prevent the nation from fully realizing the potential gains from specialization, exchange, and competition.
• C) They protect domestic producers and thereby promote economic growth.
• D) Both a and c are correct.

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Definitions:

Asset Test

A financial ratio or test used to determine the ability of a company to meet its debt obligations by converting its assets into cash.