CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

Which trade policy will have no impact on government revenue?
A. VER
B. Export subsidy
C. Import quota
Explanation: The VER allows the quota rent resulting from the decrease in trade to be captured by the exporter. For B, government revenue actually falls. For C, the result is mixed, as it depends on whether the quota rents are captured by the importing country through sale of licenses or by the exporters.

User Contributed Comments 5

User Comment
SalimBouch some one can explain? I didnt understand the explanation?
timkalt It is also possible to exclude b) and c) as an Export subsidy cost the gov money (less revenue) and an import quota brings money (even more harmful than tariff). Therefore, VER is the only possibility and also voluntary imposed by exporter.
conorwalsh Export subsidy is a cost... revenue remains the same no?
nmech1984 conorwalsh I considered the same.
edrei7 I think the question needs to clarify which government revenue is affected. Because in export subsidies, only the exporting country's government revenue is affected.
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