In the Importing Country, the Most Likely Effects of Tariffs

question 39

Multiple Choice

In the importing country, the most likely effects of tariffs and/or import quotas is to _______ prices and ________ consumption of the protected goods.

• A) raise; reduce
• B) raise; raise
• C) raise; not affect
• D) reduce; reduce

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Definitions:

Quota

A government-imposed trade restriction that limits the number or monetary value of goods that can be imported or exported during a specified period.

Import Quota

A government-imposed limit on the quantity or value of goods that can be imported into a country.

Tariffs

are taxes imposed by a government on imported goods, designed to protect domestic industries and to generate revenue.

Government Revenue

The total income received by the government from taxes and non-tax sources used to fund public spending.