The Basic Difference in the Economic Effects of a Tariff

question 95

Multiple Choice

The basic difference in the economic effects of a tariff compared with a quota is that a:

• A) Quota reduces domestic consumption of the product, but a tariff does not
• B) Tariff allows imports to increase if demand increases, whereas a quota does not
• C) Tariff raises product prices, but a quota does not
• D) Quota raises product prices, but a tariff does not

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Definitions:

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including closed funds and exchange traded funds.

Securities

Financial instruments that represent an ownership position, a creditor relationship, or rights to ownership, expressed in the form of stocks, bonds, or options.

Rate of Return

The percentage gain or loss on an investment over a specified period, reflecting the income and appreciation of an investment.

Average Cumulative Investment

The total sum of all investments made over a period of time, divided by the number of investments.