The Japanese government was pressured by the U.S. government to place limits on the number of...

The Japanese government was pressured by the U.S. government to place limits on the number of vehicles exported to the United States by Japanese automobile producers in 1981. This is an example of

A. tariff rate quota

B, Specific tariffs

C. Voluntary export restraint

D. Ad valorem tariff

Expert Solution

Answer-

C.Voluntary export restraint(VER)

This is voluntary because it is self imposed by the exporting country,when requested by the importing country after reaching an agreement.It is a type of non-tariff barrier and consists of restrictive trade barriers like quotas,sanctions and embargoes,that are used by the country.As per this,a limit is placed on the quantity of goods being exported to other countries.This is done to promote the domestic business and is a example of protectionism in the world trade.This results in welfare of the domestic producers due to decreased competition,increased prices and more profits.This also reduces the national welfare as people are left with lesser choices of products and as there is less competition,they can be exploited more and more.

Ad valorem tariff is a latin term,in which the amount of tax to be imposed is determined by the value of the transaction.Tariff rate quota is a tool used by the importing country to discourage or limit the imports by placing quotas and levying a number of tariffs.Specific tariffs are the amount of money imposed per unit of a good imported.For every certain physical unit of a commodity to be imported,a fixed sum of money has to be paid.This is also used to discourage imports.

Rahul Sunny answered 2 hours ago

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