Match each type of barrier to trade to its effect.taxes certain classes of imported or exported goods
Effect: Increase in price of the taxed goods, leading to decrease in demand and consumption of those goods
To match the type of barrier to trade with its effect, we need to list the possible types of barriers and the corresponding effects.
Types of barriers to trade:
1. Tariffs (taxes on imported or exported goods)
2. Quotas (numeric restrictions on imports or exports)
3. Embargoes (complete bans on trade with a particular country)
4. Subsidies (financial support given to domestic industries)
Effects of these barriers can include:
A. Increase in domestic prices of imported goods
B. Decrease in imports and increase in domestic production
C. Reduction in consumer choices and variety of goods
D. Increase in government revenue
Now, we can match the specific type of barrier with its effect based on the given options:
The type of barrier that taxes certain classes of imported or exported goods is tariffs. The corresponding effect would be an increase in government revenue (D), as the taxation generates revenue for the government.
The type of barrier to trade you mentioned, which is taxes certain classes of imported or exported goods, is known as a tariff. The effects of tariffs on trade are as follows:
1. Increase in prices: Tariffs can lead to an increase in the prices of imported goods, making them more expensive for consumers.
2. Reduction in consumption: Higher prices resulting from tariffs can reduce the demand for imported goods, leading to a decrease in consumption.
3. Protection for domestic industries: Tariffs can protect domestic industries from foreign competition by making imported goods more expensive, giving the domestic industry a competitive advantage.
4. Retaliation and trade disputes: Tariffs can lead to tensions between countries and spark trade disputes, as affected nations may impose retaliatory tariffs on each other's goods.
5. Decreased efficiency and resource allocation: Tariffs can lead to an inefficient allocation of resources, as domestic producers might not have the same comparative advantage as foreign producers, resulting in a misallocation of resources within the country.
It is important to note that the actual effect of tariffs can vary depending on the specific circumstances and the level at which they are applied.