A country decides to impose higher tariffs on imported goods to encourage domestic production. This policy change impacts the circular flow of income and expenditure by altering the dynamics of international trade. In this scenario, the imposition of tariffs on imports primarily: A) Acts as a leakage in the circular flow B) Functions as an injection into the circular flow C) Has no significant impact on the circular flow D) Reduces government expenditure in the circular flow
A country decides to impose higher tariffs on imported goods to encourage domestic production. This policy change impacts the circular flow of income and expenditure by altering the dynamics of international trade.
In this scenario, the imposition of tariffs on imports primarily:
A) Acts as a leakage in the circular flow
B) Functions as an injection into the circular flow
C) Has no significant impact on the circular flow
D) Reduces government expenditure in the circular flow
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