Question

Which of the following statements about trade policy is true?

	A country's trade policy has no impact on the size of its trade balance
	A restrictive import quota decreases a country's net exports
	A restrictive import quota increases a country's net exports
	An abolition of a restrictive import quota increases a country's net exports
	None of the above

Answer 1

-->None of the above...... because, A country's balance of trade is defined by its net exports (exports minus imports) and is thus influenced by all the factors that affect international trade. These include factor endowments and productivity, TRADE POLICY, exchange rates, foreign currency reserves, inflation, and demand.

-->>Restrictive import quotas can increase or decrease net exports depending upon how other countries react to these restrictive trade practices.