How do high tariffs and other restraints on international trade affect a nation's prosperity?
A) They increase employment and thereby promote the growth of real GDP.
B) They prevent the nation from fully realizing the potential gains from specialization, exchange, and competition.
C) They protect domestic producers and thereby promote economic growth.
D) Both a and c are correct.

Question

Quizplus · Accepted Answer

High tariffs and other restraints on international trade prevent a nation from fully realizing the potential gains from specialization, exchange, and competition. This can result in reduced economic growth and limited opportunities for consumers to access a wider range of goods and services at lower prices. While such restraints may temporarily protect domestic producers, over the long term they can harm the overall health of the economy. Option A is incorrect because while employment may be temporarily increased, this does not necessarily lead to sustained economic growth. Option C is also incorrect because protectionism does not necessarily promote overall economic growth.

How Do High Tariffs and Other Restraints on International Trade