How did high tariffs hurt many Americans during periods of protectionist trade policy?

• A. By reducing government revenue and leading to budget deficits
• B. By lowering the cost of domestic goods and increasing consumer purchasing power
• C. By encouraging foreign countries to buy more American exports
• D. By increasing the prices of imported goods, making everyday products more expensive for consumers

Answer: (D)

Verified step by step guidance

1. Understand the role of tariffs: Tariffs are taxes imposed on imported goods, which increase the cost of these goods when they enter the domestic market.
2. Analyze the effect of higher tariffs on prices: When tariffs increase, the price of imported goods rises because importers pass the additional cost onto consumers.
3. Consider consumer impact: Higher prices on imported goods mean consumers have to pay more for everyday products, reducing their purchasing power.
4. Evaluate the broader economic effect: Increased prices can lead to decreased consumption of imported goods and potentially domestic goods if substitutes are also expensive, which can slow economic activity.
5. Recognize the protectionist intent and its downside: While tariffs aim to protect domestic industries by making foreign goods more expensive, they often hurt consumers by raising prices and limiting choices.