Question

If the United States restricted the importation of a good by using a tariff, all of the following results would occur EXCEPT that:

a. the price received by domestic producers would increase. b. the price paid by domestic consumers would increase.
c. government revenue would increase.
d. foreign exports of the good would increase.

Answer 1

When the United States restrict the import of a good by using a tariff, it means, it will be expensive to import the goods from abroad in the United States. Therefore, the demand for the foreign goods will decrease in the United States, so on the basis of this reasoning, we can say that the right option is D, that is, foreign exports of the good will increase because, due to the tariffs the foreign exports of the goods will decrease as consumers will have to pay the higher prices for the goods imported from abroad which will reduce the demand of foreign goods in the United States.