When a government increases the cost of international trade, it is:
A) helping domestic consumers.
B) hurting all domestic producers.
C) reducing the total amount of output available to domestic consumers.
D) keeping all domestic prices artificially low.

Question

Quizplus · Accepted Answer

By increasing the cost of international trade, the government is reducing the total amount of output available to domestic consumers. This can lead to higher prices and reduced consumer choice. It may also hurt domestic producers who rely on exports, as they will have to pay higher tariffs or face other trade barriers. However, it is not necessarily true that all domestic producers will be hurt, as some industries may benefit from protectionist measures. Additionally, the government's actions may not necessarily help domestic consumers nor keep domestic prices artificially low.

When a Government Increases the Cost of International Trade, It