Question

What is one of the main economic effects of a tariff increase?

Reduced productivity

Higher prices for consumers

Increased wages for workers

Decreased profits for domestic industries

Answer 1

Hey, do you know what a tariff is?

Answer 2

Like a tax or something on things that are exported or imported right?

Answer 3

Yep, thats right.

So you know what a tariff is, so what can you cross out as incorrect and narrow our choices?

Answer 4

D?

Answer 5

Yep, thats one that you can cross out.

What about A? Would a tax on an imported or exported good result in lower productivity for the company making it?

Answer 6

No, i guess not.

Answer 7

Great. So you have another one thats wrong.

What about B. Would taxes result in higher end prices for the person buying it?

Answer 8

no i think

Answer 9

So it is C?

Answer 10

Not exactly. Tell me, why wouldn't taxes result in higher prices at the end?

Answer 11

I don't know...

Answer 12

Remember, a tax is something that a governing body puts on a product to produce revenue for the government. The company who makes the product do not add tax to it, that is all the government.

Since tariffs are usually only put in place by the government, would you reconsider B as being wrong?

Answer 13

So the answer is B right?

Answer 14

Yes it is. Do you understand why?

Answer 15

Sort of

Answer 16

Basically a tariff is an added tax that a government puts on imports/exports. Due to this, the price at the end of the line with the final consumer is usually higher.

Due to this, governments can use tariffs to coerce other nations to do what they want. Say you need food badly, well a government could put a tariff on the food if they didn't like something you were doing, and it would cost more to import that food into your country.

This has actually happened many times before. Do you need any further explanation?

Answer 17

No thanks, I get it now. Thank you so much for explaining it to me! :D I was so confused lol.

Answer 18

Anytime!