ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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They both restrict or limit trade between countries.
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They both completely stop trade between countries.
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They both increase trade between countries.
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They both make trading a lot easier between countries.
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Detailed explanation-1: -The tariff is a tax on imports while quota is a sort of quantity limit set on imports. However, they do not outrightly influence the domestic business operations. As both are the methods used by the government to reduce imports and encourage exports, it is hard to elaborate the difference between tariff and quota.
Detailed explanation-2: -Quotas and tariffs are both used to protect domestic industries by artificially raising prices in the domestic market.
Detailed explanation-3: -Both tariffs and quotas increase the equilibrium price and decrease the equilibrium quantity in the domestic market, compared to free trade.
Detailed explanation-4: -Protectionism is the economic policy of restraining trade between countries through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to foster fair competition between imports and domestically produced goods and services.
Detailed explanation-5: -How are quotas and tariffs typically applied to restrict international trade? Tariffs are taxes on imported goods and services, and quotas limit the number of imported goods and services.