CLEP Principles of Macroeconomics Exam Prep

Answer - A - An import quota reduces imports by restricting the quantity of one particular good that can be imported from another country.

Key Takeaway: Import quotas set a limit on the physical quantity of a particular good that can be imported into a country in a given period of time. Like all trade restrictions, quotas are used to benefit the producers of the specific good within the domestic economy (typically at the expense of consumers). Many economic critics believe that quotas lead to corruption like bribes and smuggling.