In an inflationary environment,then over time
A)an import quota would raise more revenue than a specific tariff.
B)a tariff quota will tend to raise more revenue than a specific tariff.
C)a specific tariff will tend to raise more revenue than an ad valorem tariff.
D)an ad valorem tariff will tend to raise more revenue than a specific tariff.
E)an optimum tariff will tend to raise more revenue than an escalating tariff.

Question

Quizplus · Accepted Answer

An ad valorem tariff, which is a percentage of the value of the goods, will automatically increase with inflation as the prices of goods rise, thus generating more revenue compared to a specific tariff, which is a fixed amount per unit and does not adjust with inflation.

In an Inflationary Environment,then Over Time