A tariff imposed by Canada on Japanese cars ________ the price of cars in Canada and ________ the quantity of Japanese cars imported into Canada.

Question

Quizplus · Accepted Answer

When a tariff is imposed on a good, it increases the price of the good in the importing country, which is Canada in this case. Therefore, the first blank is filled by "raises". Secondly, the imposition of a tariff makes the imported product relatively more expensive compared to the locally produced substitute, which would result in a decrease in the quantity of the imported good. Therefore, the second blank is filled by "decreases".

A Tariff Imposed by Canada on Japanese Cars ________ the Price