Protectionist policies implemented in a small open economy with a trade deficit have the effect of the trade deficit and the quantity of imports and exports.
A)decreasing; decreasing not
B)changing; decreasing
C)decreasing; not changing
D)not changing; not changing

Question

Quizplus · Accepted Answer

Protectionist policies, such as tariffs or quotas, are designed to reduce imports, which can decrease the trade deficit by reducing the quantity of imports. However, they can also lead to a decrease in exports if other countries retaliate or if domestic costs rise, making exports less competitive.

Protectionist Policies Implemented in a Small Open Economy with a Trade