Ask Question
BusinessBusiness
24 July, 00:43

If nations erect tariffs and quotas to restrict trade, what is likely to happen to predicted values of currencies drawn from the purchasing power parity theory?

A. They will be understated for tariffs and overstated for

quotas.

B. They will be overstated for tariffs and understated for

quotas.

C. They will be the correct values.

D. They will be incorrect.

+2
Answers (1)
  1. 24 July, 00:47
    0
    B) They will be overstated for tariffs and understated for quotas.

    Explanation:

    Trade tariffs make foreign goods more expensive, resulting in unrealistically "cheaper" domestic products. This would overstate the purchasing power of the economy due to "cheaper" domestic products.

    On the other hand, trade quotas reduce the number of imported goods but it tends to increase the price of domestic goods. Domestic suppliers will see a surge in their sales but at a high price. This will artificially lower the purchasing power of the economy due to "expensive" goods.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “If nations erect tariffs and quotas to restrict trade, what is likely to happen to predicted values of currencies drawn from the purchasing ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
The tragedy of the commons applies especially strongly to resources like fish, forests, and agricultural land because these resources: Select one. a. are scarce. b. are more precious than others. c. must be carefully maintained to remain useful. d.
Answers (1)
During a home visit, the nurse finds that an adolescent is upset after failing a midterm exam at school. What positive statement does the nurse use to comfort the adolescent?1 "You should not be upset for such a small reason.
Answers (1)
As a speaker, the best way to utilize the lectern during your speech is to
Answers (1)
Financial compensation falls into two general categories, which are:
Answers (1)
During the first year of Wilkinson Co.'s operations, all purchases were recorded as assets. Store supplies in the amount of $19,350 were purchased. Actual year-end store supplies amounted to $6,450. The adjusting entry for store supplies will a.
Answers (1)
New Questions in Business
Joyce finds that the members of the project team to which she has been promoted are all middle-aged men. joyce wonders if she, a young new graduate from a local university, will be taken seriously. joyce is likely to be reacting to a
Answers (1)
What is inflation? A. The value of products and services produced in a country B. The growth of value in a company C. When the value of a dollar goes down, so you can't get as many products or services for your dollar D.
Answers (1)
The Frank Company has issued 10%, fully participating, cumulative preferred stock with a total par value of $300,000 and common stock with a total par value of $900,000. Dividends for one previous year are in arrears.
Answers (1)
How did Blue Bell's response to their contamination at it's plants in packed the triple bottom line
Answers (1)
A company's trial balance included the following account balances: Accounts Payable $ 19,207 Accounts Receivable 81,336 Cash 73,324 Income Tax Payable 3,512 Inventory 25,816 Note Payable, due in two years 1,709 Equipment 54,128 Stockholders' Equity
Answers (1)
Home » Business » If nations erect tariffs and quotas to restrict trade, what is likely to happen to predicted values of currencies drawn from the purchasing power parity theory? A. They will be understated for tariffs and overstated for quotas. B.
Sign Up Forgot Password?