Final answer:
Tariffs are taxes that governments impose on imported goods and services. There are two types of tariffs: a revenue tariff and a protective tariff. The statement is True.
Step-by-step explanation:
Tariffs are taxes that governments impose on imported goods and services. They are used to protect domestic industries and raise revenue for the government. There are two types of tariffs: a revenue tariff, which is designed to raise money for the government, and a protective tariff, which raises the price of imported goods to make domestic products more competitive. For example, many nations use tariffs to protect emerging industries from foreign competition. By raising the prices of imported goods, tariffs encourage consumers to buy domestically-produced goods instead. This helps fledgling industries in developing nations.
However, constantly raising tariffs can lead to inefficiencies in the protected industries and reduce the welfare of consumers. Industries may have less incentive to become internationally competitive in terms of price and quality. It is important for governments to strike a balance between protecting domestic industries and promoting international competitiveness. In summary, the statement is True. There are two types of tariffs: a revenue tariff and a protective tariff.