The effect of the imposition of a new tariff is to ________ domestic production of the commodity and ________ the domestic consumption of the commodity.

Question

Quizplus · Accepted Answer

The imposition of a new tariff increases the cost of imported goods, making domestic goods relatively cheaper, which encourages an increase in domestic production. At the same time, the higher prices resulting from the tariff tend to decrease overall domestic consumption of the commodity.

The Effect of the Imposition of a New Tariff Is