What is the difference between an ad valorem tariff, specific tariff, and compound tariff? What is a countervailing duty and its purpose?
What will be an ideal response?
The three forms of import tariffs are ad valorem, specific, and compound. The ad valorem tariff is assessed as a percentage of the market value of the imported good. A specific tariff is assessed as a specific dollar amount per unit of weight or other standard measure. A compound tariff has both an ad valorem component and a specific component. A countervailing duty (CVD) is an ad valorem tariff on an imported good that is imposed by the importing country to counter the impact of foreign subsidies. The CVD is calculated to just offset the advantage the exporter obtains from the subsidy. In this way, trade can still be driven by the competitive strengths of individual firms and the laws of comparative advantage, rather than by the level of subsidies that governments offer their firms.
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Fill in the blank(s) with the appropriate word(s).
A business received $3,000 from a customer in payment of an amount owed. The effect of the transaction on the accounting equation was to:
A) increase one asset, decrease another asset. B) increase an asset, increase a liability. C) decrease an asset, decrease a liability. D) increase an asset, increase owner's equity.