Question

a) What is a tariff?

b) What is protectionism?

c) What is the exchange rate?

Answer 1

Answer) A tariff is a tax inflicted by a government on goods and services imported from other nations that serve to increase the price and make imports less attractive, or at least less competitive, versus domestic goods and services. Tariffs are generally introduced as a means of constraining trade from specific nations or curtailing the import of particular kinds of goods and services.

2) Protectionism refers to the policy of protecting domestic industries against foreign competition by means of tariffs, subsidies, import quotas, or other restrictions or handicaps placed on the imports of foreign competitors.

3) The Exchange rate is the rate of one currency in terms of another currency. There are two types of exchange rate.one is fixed and the other is floating. Fixed exchange rates are determined by central banks of a country whereas floating exchange rates are determined by the mechanism of market demand and supply.