Which type of policy instrument raises the most revenue for the government?
A) Voluntary export restraints
B) A tariff
C) A quota
D) If they are set at the same level, all of the above raise the same amount of revenue.
E) None of the above answers is correct because none of the policy instruments raises revenue for the government.

Question

Quizplus · Accepted Answer

A tariff is a tax on imported goods, so it directly raises revenue for the government. Voluntary export restraints and quotas restrict imports, but do not necessarily generate government revenue.

Which Type of Policy Instrument Raises the Most Revenue for the Government