ACCA Applied Knowledge · Business and Technology · Macroeconomic factors
A government imposes a tax on imported steel to protect domestic steel producers. Which term describes this measure?
A tax on imported goods is called a tariff. It raises the price of foreign steel relative to domestic steel, protecting local producers. It differs from a quota, which limits quantities, a subsidy, which supports producers financially, and an embargo, which prohibits trade completely.
- AA quota
- BA tariffCorrect
- CA subsidy
- DAn embargo
Explanation
A tariff is a tax levied on imported goods, raising their price relative to domestic goods. A quota limits quantity, a subsidy is financial support to producers, and an embargo bans trade altogether.
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