Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Could you explain the difference between Nominal and Effective tariff rates? (This question is part of my International Economics's postgrad unit). The lecturer has explained

Could you explain the difference between Nominal and Effective tariff rates?

(This question is part of my International Economics's postgrad unit). The lecturer has explained this in the slides, but I dont quite understand what he has written, therefore I am asking you).

According to the lecture slides, Nominal applies to value of finished goods/products. However, effective tariff rates takes into account not only nominal tariff on finished goods but any tariff applieid to imported inputs. (I dont get what is imported input?).

If tariff on finished product is less than tariff on imported input :

-Effective rate of protection is less than nominal tariff(may even be negative)

-Tariff protects domestic suppliers of raw materials more than domestic manufactures.

If tariff on finished product exceeds tariff on imported input-

-Effective tariff exceeds nominal tariffs.

Could you please better explain what has been stated in the slide? I dont get it :(

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

American Political Economy In Global Perspective

Authors: Harold L Wilensky

1st Edition

1139227920, 9781139227926

More Books

Students also viewed these Economics questions

Question

How do you talk about your complaining customers?

Answered: 1 week ago