Question

How do tariffs on imports affect a country’s balance of trade?
a.
Tariffs raise government revenue.
b.
Tariffs ensure that all countries are traded with equally.
c.
Tariffs reduce the amount of imports a country makes.
d.
Tariffs increase the amount of money a country makes from imports.


Please select the best answer from the choices provided

A
B
C
D

Answer 1

C

Tariffs raise the price of imports, reducing the quantity imported and thus improving (or reducing the deterioration of) the balance of trade. (They can also raise government revenue, but that is not the primary balance-of-trade effect.)