Question

Question 16 of 25

2 Points
Which of the following best describes the effect of a tariff on the import of
cars from a foreign country?

A. The domestic economy goes into recession

B. Foreign cars become more expensive.

C. The government runs a budget deficit.

D. Demand for foreign cars is increased.

The answer is B. Foreign cars become more expensive.​

Answer 1

Answer: B. Foreign cars become more expensive.

Explanation: The tariff slapped on imported goods such as cars and other foreign commodities will raise the overall cost of the product on the side of the seller and definitely the final selling price of such product to the consumers. This is used to raise revenue for the government and also to encourage the manufacture, adoption and support for locally manufactured products. Locally manufactured substitute will tend to be cheaper and the additional tariff may put importers and consumers off, and hence settle for cheaper locally made alternative.