If higher tariffs, such as those enacted by the Smoot-Hawley trade bill, reduce the imports of the United States, which of the following will be most likely to occur?
A) U.S. employment will increase.
B) The unemployment rate of the United States will decline.
C) U.S. exports will increase because foreigners will want to buy more from U.S. producers.
D) U.S. exports will decline because foreigners will be earning fewer of the dollars needed to purchase goods and services from Americans.

Question

Quizplus · Accepted Answer

Higher tariffs reduce imports, leading to a decrease in foreign earnings of U.S. dollars, which in turn reduces their ability to purchase U.S. exports.

If Higher Tariffs, Such as Those Enacted by the Smoot-Hawley