Question

Throughout the post-world war ii era, the importance of tariffs as a trade barrier has

a. increased.
b. decreased.
c. remained the same.
d. fluctuated wildly.
e. demonstrated a classic random walk with a mean-reversion tendency.

Answer 1

The importance of tariffs as a trade barrier has decreased throughout the post-World War II era, with tariffs falling from an average of 40% in 1946 to less than 5% after decades of GATT negotiations.

Step-by-step explanation:

The question, "throughout the post-world war ii era, the importance of tariffs as a trade barrier has a. increased. b. decreased. c. remained the same. d. fluctuated wildly. e. demonstrated a classic random walk with a mean-reversion tendency," addresses changes in trade practices following the Second World War. The answer is b. decreased.

After World War II, the global economy saw a significant decline in tariff levels, especially among industrialized nations. Initially, tariffs were quite high, standing at an average of 40% in 1946. Through successive rounds of General Agreement on Tariffs and Trade (GATT) negotiations, this figure sharply fell to less than 5% by 1990, indicating a clear trend towards lower barriers to trade. U.S. tariffs followed this downward trajectory, dropping to less than 2% by the end of the 20th century. This dramatic reduction led GATT discussions to shift to a wider array of trade issues since tarifs had been substantially diminished.