If the government reduces tariffs or quotas on imports, then:

Question

Quizplus · Accepted Answer

When the government reduces tariffs or quotas on imports, domestic consumers will have access to cheaper imports, which can lead to an increase in imports. This can cause the real current account balance to fall, as there will be more imports coming into the country. However, it is not likely to affect real GDP or net domestic investment directly, as these are determined by various other factors in the economy.

If the Government Reduces Tariffs or Quotas on Imports, Then