If the U.S. (a large country) imposes a tariff on its imported good, this will tend to
A) cause a deterioration of U.S. terms of trade.
B) have no effect on terms of trade.
C) improve the terms of trade of all countries.
D) raise the world price of the good imported by the United States.
E) improve the terms of trade of the United States.

Question

Quizplus · Accepted Answer

By imposing a tariff on its imported good, the U.S. will be making foreign goods more expensive and therefore encouraging consumers to buy domestically produced goods instead. This will increase the demand for U.S. goods and could potentially improve the terms of trade of the United States.

If the US (A Large Country) Imposes a Tariff on Its Imported