CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

Which statement is FALSE?
A. The welfare loss suffered by the importing country is generally greater with a quota than with an import tariff.
B. A VER has the same impact on the importing country as an import quota.
C. The welfare loss caused by an export subsidy is greater for a small country than for a large country.
Explanation: A is true. The tax revenue that would be raised by the equivalent tariff is instead captured by foreign producers as quota rents. B is also true. In both cases, foreign producers capture all of the quota rents.

C is false. In the case of a large country, the world price declines as the large country increases exports. The decline in world prices implies that a part of the subsidy is transferred from the large country to a foreign country.

User Contributed Comments 3

User Comment
dbalakos Guys anyone knows what a VER is?
agaller it's in the LOS bruh
nmech1984 What is LOS bruh? :P
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