Practicing Success

Target Exam

CUET

Subject

General Test

Chapter

General Knowledge

Topic

Economics

Question:

Taxes which the government puts on the imports is an example of which of the following?

Options:

Trade barrier

Liberal economy

Collateral

None of the above

Correct Answer:

Trade barrier

Explanation:

A trade barrier is any obstacle that limits the movement of trade flows between countries. Generally, the purpose of this measure is to protect the domestic economy. Tax on import is an example of "Trade barrier". Tax on imports cause the prices to rise resulting in decrease of the demand in the country. It is called a barrier because some restriction has been set up. Governments can use trade barriers to increase or decrease (regulate) foreign trade and to decide what kinds of goods and how much of each, should come into the country.