If tariffs are decreased, the long-run effect is most likely to be
A) a decrease in both U.S. imports and exports.
B) an increase in both U.S. imports and exports.
C) a decrease in U.S. imports and an increase in U.S. exports.
D) an increase in U.S. imports and a decrease in U.S. exports.

Question

Quizplus · Accepted Answer

Decreasing tariffs generally makes imported goods cheaper, leading to an increase in imports. As other countries may reciprocate by lowering their tariffs, U.S. exports are likely to increase as well.

If Tariffs Are Decreased, the Long-Run Effect Is Most Likely