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Many People Argue That the Imposition of Tariffs in Industry

Question 43

Multiple Choice

Many people argue that the imposition of tariffs in industry X will increase factor incomes in that industry and therefore be good for the country as a whole. The counter- argument is that


A) factor incomes overall would increase, but wages in industry X would fall, which would hurt workers in that industry.
B) the increase in factor incomes would increase unemployment.
C) the increase in factor incomes in industry X would reduce profits to business owners by an equal amount.
D) the increase in industry X factor incomes would be more than offset by reductions in real incomes to all other domestic residents.
E) factor incomes would first rise and then decrease in industry X.

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