How do high tariffs and other restraints on international trade affect a nation's prosperity?
A) They increase employment and thereby promote the growth of GDP.
B) They prevent a nation from fully realizing the potential gains from specialization, exchange, and competition.
C) They protect domestic producers and thereby promote economic growth.
D) Both a and c are correct.

Question

Quizplus · Accepted Answer

High tariffs and other restraints on international trade prevent a nation from fully realizing the potential gains from specialization, exchange, and competition. This results in reduced economic efficiency and innovation and ultimately limits a nation's prosperity. While they may offer some protection to domestic producers in the short run, in the long term they can lead to inefficiencies and ultimately harm the domestic economy. Option A and C are incorrect because while they may offer short-term benefits, they do not promote sustained and long-term economic growth.

How Do High Tariffs and Other Restraints on International Trade