What Is One of the Major Shortcomings of Using Tariffs

question 105

Multiple Choice

What is one of the major shortcomings of using tariffs or quotas to "save American jobs"?

• A)Trade barriers protect the development of new technology, but the new technology eliminates jobs.
• B)Import restrictions alter the composition of domestic employment, but they have minimal effect on the overall level of domestic employment.
• C)The volume of trade with other nations is limited to a few industries, so trade restrictions would not increase national employment.
• D)Major American firms have produced many products in other countries and would not hire more domestic labor when trade barriers are imposed.

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Definitions:

Long-run Aggregate Supply Curve

A curve that shows the relationship between the overall price level and the quantity of output that all firms in an economy are willing to produce, assuming all resources are fully employed.

Monetary Policy

The process by which the central bank or monetary authority of a country controls the supply of money, often targeting an inflation rate to ensure economic stability.

Short-run Phillips Curve

A curve representing the inverse relationship between the rate of inflation and the rate of unemployment in an economy over the short term.

Money Supply Growth Rate

The rate at which the amount of money available in an economy is increasing.