The use of a tariff provides monopoly protection since
A. it reduces competition from imports by raising the import price.
B. it allows more imports into the country.
C. it expands tax credits.
D. it reduces exporters' profits.
Answer: A
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A fall in the real exchange rate (appreciation) will decrease the trade balance in the short run and cause a(n) ___ of the total demand curve.
a. downward shift b. increase in the slope c. upward shift d. decrease in the slope
What is the infant-industry argument for protection from international trade?
A) Domestic firms must be protected until they gain a comparative advantage. B) Any firm necessary in wartime must be protected. C) Foreign producers selling below cost to drive domestic firms bankrupt must be stopped. D) Domestic jobs must be protected from competition from low-paid foreign workers. E) Foreigners selling products in the economy limit the nation's diversity and stability.