Which of the following would likely to be a long-term effect of the imposition of such tariffs?

Country Y and country Z both impose tariffs on goods imported from each other.

Which of the following would likely to be a long-term effect of the imposition of such tariffs?
A . None. Tariffs affect exports and imports rather than real income
B . Real income would be lower in Z but higher in Y
C . Real income would be lower in Y but higher in Z
D . Real income would grow at a slower rate in both countries compared to a situation in which there are no tariffs

View Answer

Answer: D