If One Nation Retaliates Against Another's Tariffs with Tariffs of Their

question 4

Multiple Choice

If one nation retaliates against another's tariffs with tariffs of their own the GATT stipulates that the retaliatory tariff must

• A)be on the same good.
• B)end within a year.
• C)be on a good whose sales are roughly similar.
• D)be submitted to the WTO for prior approval.

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Definitions:

Deadweight Loss

A loss of economic efficiency that can occur when equilibrium for a good or service is not achieved or is unattainable.

Tax Per Unit

A tax that is levied on a per unit basis, meaning for every unit of a good produced or sold, a certain amount of tax is paid.

Deadweight Loss

A reduction in economic effectiveness that happens when a good or service does not reach, or cannot reach, its equilibrium state.

Tax Per Unit

Tax per unit is a fixed amount of tax applied to a product or service, regardless of its price, which directly affects the supply curve by increasing production costs.