CSS 2008 Economics Paper 2 — MCQs

(19) Trade theory predicts that protectionist measures produce:

• APermanent increase in the rate of inflation
• BTemporary increase in the rate of inflation
• CPermanent reductions in the rate of inflation
• DTemporary reductions in the rate of inflation E Temporary or permanent increase in the rate of inflation depending upon (1) whether they are quotas or tariffs and (2) the degree of market power held by domestic supplies in the import competing industry.