PRC-3 · Chapter 20 · Question 29 of 30
If a government suddenly imposes heavy restrictions and tariffs on the flow of imports into the country, it should expect all of the following consequences EXCEPT:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Cheaper raw materials for domestic manufacturers
Explanation
Tariffs make imported goods more expensive. This protects local firms and improves the trade balance, but forces domestic manufacturers relying on imported raw materials to pay higher, not cheaper, prices.
More Balance of Trade and Payments MCQs
- Q1Country X passes a law stating that exactly 50,000 foreign-made vehicles may enter the country next year, and absolutely no more. What…
- Q2To protect its local steel industry, a country places a 20% specific tax on all imported steel, instantly making foreign steel more…
- Q3A country calculates an index comparing the prices of the goods it exports against the prices of the goods it imports. This crucial ratio…
- Q4A developing nation argues it must use tariffs to block cheap foreign competition so its newly established, fragile solar-panel factories…
- Q5In the Balance of Payments framework, which specific account records the day-to-day international transactions involving the import and…