The imposition of a protectionist measure should produce
A) a one-time shock to inflation even if not accommodated by fiscal or monetary policy.
B) a permanent shock to inflation even if not accommodated by fiscal or monetary policy.
C) a one-time shock to inflation only if accommodated by fiscal and monetary policies.
D) a permanent shock to inflation only if accommodated by fiscal and monetary policies.
E) a one-time shock to inflation if accommodated by monetary policy alone.

Question

Quizplus · Accepted Answer

Protectionist measures, such as tariffs, typically cause a one-time increase in the prices of imported goods, leading to a temporary rise in inflation. This effect occurs regardless of fiscal or monetary policy adjustments.

The Imposition of a Protectionist Measure Should Produce