The effective rate of protection ?
Correct answer: D. shows the increase in value added for domestic production that a particular tariff structure makes possible, in percentage terms
- A. distinguishes between tariffs that are effective and those that are ineffective
- B. is the minimum level at Which a tariff becomes effective in limiting imports?
- C. shows how effective a tariff is in raising revenue for the government
- D. shows the increase in value added for domestic production that a particular tariff structure makes possible, in percentage terms
Explanation
The effective rate of protection measures the percentage increase in domestic value added caused by the complete tariff structure, including tariffs on inputs and final goods. It can therefore differ substantially from the nominal tariff on the final product.
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