A tariff______________?
Correct answer: B. Reduces the volume of trade
- A. Increase the volume of trade
- B. Reduces the volume of trade
- C. Has no effect on volume of trade?
- D. A and C of above
Explanation
A tariff raises the domestic price of imported goods, reducing the quantity demanded of imports and therefore the volume of international trade. Its protective effect is the usual reason governments impose it.
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