IAI Actuarial Core Principles · Business Economics · Globalisation and multinational business
Which of the following is a non-tariff barrier to trade?
A quota limiting imports to a fixed number of units is a non-tariff barrier because it restricts the quantity of imports directly rather than taxing them. Ad valorem and specific duties are tariffs, while exchange rate movements and income tax cuts are not trade barriers.
- AAn ad valorem duty of 10% on imported cars
- BA specific duty of Rs 50 per kg on imported tea
- CA quota limiting imports of a product to 10,000 units a yearCorrect
- DA fall in the exchange rate that raises import prices
- A reduction in domestic income tax
Explanation
Quotas restrict quantity directly rather than taxing imports, so they are non-tariff barriers. Ad valorem and specific duties are both tariffs. A change in exchange rate or income tax is not a deliberate trade barrier.
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