Which of the following statements concerning tariffs is NOT true?
A)A tariff increases domestic production.
B)A tariff creates revenue for the government.
C)A tariff decreases international trade.
D)A tariff leaves the price of imports unchanged.
E)A tariff decreases domestic consumption.

Question

Quizplus · Accepted Answer

A tariff is a tax on imported goods. By increasing the cost of imports, a tariff can make domestically produced goods more competitive, which could increase domestic production (A). Additionally, the revenue generated from the tariff goes to the government (B). A tariff can also limit international trade by increasing the cost of imports, making it less attractive for foreign companies to do business in the domestic market (C). However, a tariff will generally increase the price of imports, which can decrease domestic consumption (E). This means that statement D, which claims that a tariff leaves the price of imports unchanged, is false.

Which of the Following Statements Concerning Tariffs Is NOT True