If the tariff rate in inputs is the same as the tariff rate of finished goods the effective rate of protection will be
A) the same as the nominal rate of protection
B) zero
C) larger than the nominal rate of protection
D) maximized

Question

Quizplus · Accepted Answer

When the tariff rate on inputs is the same as the tariff rate on finished goods, the effective rate of protection equals the nominal rate of protection because the cost increase from tariffs on inputs offsets the protection given to the finished goods.

If the Tariff Rate in Inputs Is the Same as the Tariff