Asked by ayshan tarzelo on May 23, 2024
Verified
Retaliation of trade restrictions can:
A) set off still greater trade restrictions,leading to an outright trade war.
B) recover the surplus lost during the period of trade barriers.
C) decrease rent-seeking activities in the economy.
D) increase the potential gains from trade through specialization.
E) lead to phasing out of tariffs and quotas.
Trade War
A situation where countries impose tariffs or other trade barriers against each other in response to disputes, which can lead to decreased international trade.
Trade Restrictions
Measures imposed by governments to limit or control international trade, such as tariffs, quotas, and embargoes.
Retaliation
Actions taken in response to an offense or wrongdoing, often seen in international trade policies as countermeasures to tariffs.
- Discern the assorted modalities of trade constraints and comprehend their repercussions.
Verified Answer
AN
Alungile NqwenyanaMay 26, 2024
Final Answer :
A
Explanation :
Retaliation of trade restrictions often leads to a spiral of further trade restrictions, ultimately leading to a trade war. This is because countries tend to retaliate with their own restrictions, which can harm not only the targeted country but also domestic businesses and consumers. Tariff and non-tariff barriers can also trigger similar responses from other countries, leading to a vicious cycle of protectionism.
Learning Objectives
- Discern the assorted modalities of trade constraints and comprehend their repercussions.