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Tariffs on Imports quiz #1

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  • What is an example of a tariff?
    A government imposes a \$2 tax on every imported pair of shoes.
  • Why does the federal government impose tariffs?
    To generate tax revenue and to protect domestic industries from foreign competition.
  • What happens if a country lowers tariffs?
    Lowering tariffs reduces the price of imports, increases imports, and benefits consumers through lower prices.
  • What is a protective tariff?
    A protective tariff is a tax on imports designed to help domestic industries compete against lower-priced foreign goods.
  • Which type of trade barrier is a tax on imported goods?
    A tariff is a trade barrier that is a tax on imported goods.
  • What effect do tariffs have on the price and quantity of imported goods?
    Tariffs increase the price of imported goods and reduce the quantity of imports.
  • Which statements about tariffs and quotas are true?
    Both tariffs and quotas restrict imports, but tariffs generate government revenue while quotas do not.
  • What is the primary function of protective tariffs?
    To help domestic producers compete by making imported goods more expensive.
  • Which observation about tariffs is true?
    Tariffs reduce consumer surplus and increase producer surplus for domestic producers.
  • What is a tax or fee that must be paid on goods imported from other countries called?
    A tariff.
  • What are the effects of a tariff on imported goods and government revenue?
    A tariff raises the price of imported goods, reducing imports and generating government revenue.
  • What is true about the effects of tariffs and trade restrictions on trade?
    Tariffs and trade restrictions impede free trade and can create deadweight loss.
  • Which two groups are positively impacted when an import tariff is enacted? (Check all that apply.)
    Domestic producers and the government (through increased revenue).
  • How do tariffs affect domestic producers and consumers?
    Tariffs benefit domestic producers but harm consumers by raising prices.
  • Which scenario describes the operation of a tariff?
    A country imposes a tax on imported steel, making it more expensive than domestic steel.
  • Which type of goods becomes more expensive as a result of tariffs?
    Imported goods.
  • What is the long-term effect of tariffs and other trade barriers?
    They reduce total economic surplus and can lead to deadweight loss.
  • Why would a government want to make imported goods more expensive?
    To protect domestic industries from foreign competition.
  • Under what situation would the European Union impose tariffs on imports?
    If foreign goods are being sold at lower prices than domestic goods, threatening local industries.
  • What is the most likely reason that nations raised tariffs on imports during the Great Depression?
    To protect domestic industries and jobs during economic hardship.
  • Which statement best reflects the difference between tariffs and quotas?
    Tariffs are taxes on imports that generate revenue, while quotas limit the quantity of imports without generating revenue.
  • Why do high tariff levels restrict international trade?
    Because they increase the cost of imported goods, reducing the quantity imported.
  • What are laws calling for a tax on imported goods called?
    Tariff laws.
  • When a country that imports a particular good imposes a tariff on that good, what happens?
    The price of the imported good rises, imports decrease, and domestic producers supply more.
  • Introducing a tariff on vitamin Z would:
    Increase the price of imported vitamin Z, reduce imports, and benefit domestic producers.
  • Raising an existing tariff on grapes from Argentina will:
    Make imported grapes more expensive, reduce imports, and help domestic grape producers.
  • What is an example of a tariff?
    A \$5 tax on every imported bicycle.
  • What are the four direct effects of a tariff?
    Decrease in consumer surplus, increase in producer surplus, government revenue generation, and deadweight loss.