An import tariff will cause the relative demand for ________ to ________ and the relative supply for ________ to ________.
A) exports; decrease; exports; increase
B) imports; increase; imports; decrease
C) exports; increase; exports; decrease
D) imports; decrease; imports; increase
E) exports; increase; imports; decrease

Question

Quizplus · Accepted Answer

An import tariff is a tax on imported goods, making them more expensive for domestic consumers. This will decrease the relative demand for imports, as consumers are likely to shift to domestically produced alternatives. At the same time, the increased cost of imports may incentivize domestic producers to increase their supply, thereby increasing the relative supply of domestically produced goods. Therefore, the relative demand for imports will decrease while the relative supply of domestically produced goods will increase.

An Import Tariff Will Cause the Relative Demand for ________