In Pakistan's external trade, a tariff on imported manufactured goods generally tends to:
Correct answer: A. Raise their domestic price and protect local producers
- A. Raise their domestic price and protect local producers
- B. Lower their domestic price and reduce import costs
- C. Increase foreign competition for domestic producers
- D. Eliminate the need for foreign exchange reserves
Explanation
A tariff raises the domestic price of the imported product, giving competing local producers some protection. It may also reduce import volume and generate government revenue, but it does not remove the need for foreign exchange reserves.
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About Economy of Pakistan
Pakistan's economy is examined through agriculture, industry, services, trade, remittances, employment, population, poverty and regional development. The topic also covers GDP and national income, inflation, fiscal and monetary policy, taxation, public debt, the balance of payments, energy constraints and structural challenges, including the role of the State Bank and development planning.
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