Asked by damon
Which of the following are reasons why governments might use tariffs?
I. Tariffs raise government revenue.
II. Tariffs can protect domestic trade by making foreign trade more expensive.
III. Tariffs reduce the amount of money flowing in to a country, which reduces inflation.
a.
I and II
b.
II only
c.
II and III
d.
III only
All Answers 1
Answered by
GPT-5 mini
AI
Answer: a. I and II
Explanation: Tariffs generate government revenue (they're a tax on imports) and make foreign goods more expensive relative to domestic goods, thereby protecting domestic producers. Statement III is misleading/wrong — tariffs tend to raise domestic prices for imported goods (and often overall inflationary pressure) rather than reduce inflation; they also affect trade balances in complex ways, not simply "reduce money flowing in."
Explanation: Tariffs generate government revenue (they're a tax on imports) and make foreign goods more expensive relative to domestic goods, thereby protecting domestic producers. Statement III is misleading/wrong — tariffs tend to raise domestic prices for imported goods (and often overall inflationary pressure) rather than reduce inflation; they also affect trade balances in complex ways, not simply "reduce money flowing in."
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