Which of the Following Is NOT Correct About the Effects

question 21

Multiple Choice

Which of the following is NOT correct about the effects of a tariff on an imported product?

• A)Tariffs benefit domestic producers by raising price and domestic output.
• B)Tariffs increase government revenue.
• C)Tariffs mean higher prices and less consumption for consumers of the product.
• D)Tariffs increase the efficiency of how resources are allocated.

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Definitions:

Section 1231

Refers to a tax provision in the United States that includes the tax treatment of gains and losses on the sale or exchange of real or depreciable property used in a trade or business and held for more than one year.

Ordinary Asset

An asset used in a business or trade which is subject to ordinary income tax rates rather than capital gains tax rates if sold or exchanged.

Trade or Business

Trade or Business refers to any activity carried out for the purpose of earning income or profit, involving dealings in goods or services.

Inventory

The total amount of goods and materials on hand that are available for sale or will be used in production.