What Effect Do High Import Tariffs Have on a Country's

question 7

Multiple Choice

What effect do high import tariffs have on a country's export industries?

• A) Tariffs reduce the demand for foreign exchange, so the home currency appreciates; this hurts exports.
• B) Tariffs reduce the demand for foreign exchange, so the home currency depreciates; this boosts exports.
• C) Tariffs reduce the demand for foreign exchange, so the home currency appreciates; this boosts exports.
• D) Tariffs do not affect exports, just imports.

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Definitions:

Fluctuating Price

A price that changes frequently due to market conditions, demand, and supply.

Negotiated

Reached through discussion and compromise between parties, typically resulting in a formal agreement or contract.

Authorized

Having been given official permission or approval to perform a certain action or access certain information.

Shelter Principle

In commercial law, a rule that allows a person who acquires goods in good faith to retain them, even if the sale was not authorized by the owner.