What is the likely effect of imposing trade tariffs on imported goods on the consumer price index (CPI) in the importing country? A. The CPI will decrease because imported goods become more expensive. B. The CPI will remain unchanged because tariffs only affect the supply side. C. The CPI will increase as the cost of imported goods rises. D. The CPI will initially decrease but then increase as domestic producers adjust prices.

What is the likely effect of imposing trade tariffs on imported goods on the consumer price index (CPI) in the importing country? A. The CPI will decrease because imported goods become more expensive. B. The CPI will remain unchanged because tariffs only affect the supply side. C. The CPI will increase as the cost of imported goods rises. D. The CPI will initially decrease but then increase as domestic producers adjust prices.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section: Chapter Questions

Problem 1DQ

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