Understanding Tariffs and Their Impact

What is the primary purpose of a tariff?

• To encourage international trade

• To increase the cost of domestic goods

• To reduce government revenue

• To make imported goods more expensive

How does a tariff affect the price of imported goods compared to domestic goods?

• It has no effect on the price

• It makes domestic goods more expensive

• It makes imported goods more expensive

• It makes imported goods cheaper

Which of the following is a reason governments might impose tariffs?

• To encourage foreign investment

• To decrease domestic production

• To protect domestic industries

• To reduce government revenue

What is a potential downside of imposing tariffs?

• They make goods cheaper for consumers

• They can lead to job losses in export industries

• They increase international cooperation

• They have no impact on trade

How might other countries respond if a tariff is imposed on their goods?

• By imposing retaliatory tariffs

• By offering subsidies to their exporters

• By increasing imports

• By reducing their own tariffs