which of the following is not a measure for red... - WAEC Economics 2018 Question
which of the following is not a measure for reducing balance of payments deficits?
A
export drive
B
reducing tarriffs
C
adding to export goods
D
increasing local production
correct option: b
Tariffs are duties (taxes) imposed on imports. When tariffs are imposed, the prices of imports would increase to the extent of tariff. The increased prices will reduced the demand for imported goods and at the same time induce domestic producers to produce more of import substitutes. Non-essential imports can be drastically reduced by imposing a very high rate of tariff. Therefor, reducing tariffs will further increase balance of payment deficits.
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