Question

How do the effects of voluntary restraint agreements differ from the effects of a tariff? Tariffs reduce trade by more than voluntary restraint agreements. Voluntary restraint agreements result in higher prices, which increase revenue for foreign firms, while the revenue raised from tariffs goes to the domestic government. Tariffs increase the prices of imports, helping domestic producers, while voluntary restraints do not. Voluntary restraint agreements are informal agreements that can be easily changed, while tariffs are not.

Answer 1

Tariffs increase the prices of imports, helping domestic producers, while voluntary restraints do not.

Step-by-step explanation:

A tarrif is defined as a tax that is imposed by government on goods and services that are imported from another country. Tarrifs are used to discourage imports by increasing their prices compared to locally produced goods and services.

Voluntary restraint agreements is is also called voluntary export restraint. It is a restriction on the amount of goods and services that exporters are allowed to export to other countries. It is also referred to as export visa.

Tarrifs results in increase in price of goods and services while voluntary restraint agreement does not.