High tariffs on intermediate inputs
A)increase the effective rate of protection on final goods.
B)have no impact on the effective rate of protection on final goods.
C)decrease the effective rate of protection on final goods.
D)lower the nominal rate of protection on final goods.
E)raise the nominal rate of protection on final goods.

Question

Quizplus · Accepted Answer

If intermediate inputs face high tariffs, this will increase the cost of production for the final goods. As a result, the effective rate of protection on final goods will decrease because it now costs more to produce them. Additionally, high tariffs on intermediate inputs can lead to decreased competitiveness for domestic producers since foreign producers may have access to cheaper inputs, further lowering the effective rate of protection.

High Tariffs on Intermediate Inputs