Question

Say that Romania puts a tariff of 6% on its exports and 21% on its imports. If Romania has a trade deficit of (equivalent US dollars) $26. 76 billion and gained tariff revenue of $18. 9603 billion, how much are Romania’s imports worth? a. $62. 56 billion b. $64. 29 billion c. $76. 17 billion d. $97. 04 billion.

Answer 1

c. $76.17 billion

Explanation:

The relations between imports, exports, and tariffs can be described by ...

0.06E +0.21I = $18.9603 . . . . . . total tariff revenue

I -E = 26.76 . . . . . . . . . . . . . . . . trade deficit

Solving the second equation for E gives ...

E = I -26.76

Substituting into the first equation yields ...

0.06(I -26.76) +0.21I = 18.9603

0.27I = 18.9603 +1.6056 = 20.5659 . . . . add 1.6056 to both sides

I = 10.5659/0.27 = 76.17

Romania's imports are worth about $76.17 billion.

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Additional comment

The exports are worth about $76.17 -26.76 = $49.41 billion.