Practice Quiz

CLEP Principles of Management Exam Prep

Category - Macroeconomics

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What is the effect of tariffs on the import of goods?
  1. Reduces quantity of imports
  2. Increase quantity of imports from poor countries
  3. Increase quantity of imports from rich countries
  4. Has no effect on the quantity of imports
Explanation
Answer - A - Tariffs reduce the quantity of imports.

Key Takeaway: Tariffs reduce the quantity of imports and move the domestic market closer to its equilibrium without trade. With the imposition of tariffs, total surplus in the market is reduced by a known quantity.
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