The imposition of a tariff will
A) increase imports, decrease domestic production, and increase consumption
B) decrease imports, increase domestic production, and decrease consumption
C) decrease imports, decrease domestic production, and increase consumption
D) increase imports, increase domestic production, and decrease consumption

Question

Quizplus · Accepted Answer

The imposition of a tariff is a tax on imported goods. This makes them more expensive to consumers and often leads to a decrease in imports. Domestic producers are then incentivized to increase production to meet the demand previously met by imports. This can lead to an increase in domestic production. However, the higher prices of imported goods and potential retaliatory tariffs from other countries may lead to a decrease in consumption overall. Therefore, B is the best choice as it represents the most likely outcomes of a tariff.

The Imposition of a Tariff Will