Asked by Mariana Rivera on Jun 09, 2024
Verified
Which of the following is false?
A) An import quota does not generate government revenue.
B) Tariffs on imports generate government revenue as long as the domestic price is larger than the world price plus the tariff.
C) Tariffs on imports do not generate government revenue if the domestic price is larger than the world price plus the tariff.
D) Tariffs on imports generate revenue for the government.
Import Quota
A government-imposed limit on the quantity or value of goods that can be imported into a country.
Tariffs
are taxes imposed by a government on imported goods, designed to protect domestic industries and to generate revenue.
Government Revenue
The total income received by the government from taxes and non-tax sources used to fund public spending.
- Evaluate the fiscal ramifications of tariffs, quotas, and subsidies on domestic and international trading spheres.
Verified Answer
EJ
Esther JosephJun 09, 2024
Final Answer :
C
Explanation :
Tariffs on imports generate government revenue by imposing a tax on imported goods, regardless of the domestic price relative to the world price plus the tariff. The statement in C is false because tariffs generate revenue for the government even if the domestic price is higher than the world price plus the tariff, as the revenue comes from the tax on the imported goods themselves, not from the price differential.
Learning Objectives
- Evaluate the fiscal ramifications of tariffs, quotas, and subsidies on domestic and international trading spheres.