A tariff is indeed a tax imposed on imported goods, which makes imported goods more expensive and can protect domestic industries from foreign competition. Choices B, C, and D do not accurately describe the effects or nature of a tariff.

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A Tariff

Question 60

Multiple Choice

A tariff

A) is a tax imposed on imported goods.
B) encourages worldwide specialisation according to the principle of comparative advantage.
C) is a tax imposed on exported goods.
D) has no effect on prices paid by domestic consumers even though it increases the revenue collected by domestic producers.

Correct Answer: