- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 6. International Trade
- Subject 2. International Trade Restrictions and Agreements
CFA Practice Question
Which trade policy will decrease consumer surplus?
II. Import quota
III. Export subsidy
IV. VER
I. Tariff
II. Import quota
III. Export subsidy
IV. VER
Correct Answer: I, II, III and IV
User Contributed Comments 3
| User | Comment |
|---|---|
| something | Can someone explain III and IV. |
| uvp5003 | Makes it a little easier if you think of this graphically for an export subsidy - it causes a shift to the left of the supply curve, effectively reducing the area above the supply curve aka reducing the consumer surplus. A VER has effectively the same impact as a quota, but instead of being imposed by the importer, it's imposed by the exporter. So the logic you used to justify a quota is the same logic you would use to justify a VER for this question. |
| khalifa92 | all decrease consumer surplus but increase producer surplus |