Future Business Leaders of America (FBLA) Business Management Practice Test

What best describes a tariff?

1. A tax on exports

2. A tax on imports

3. A regulation on trade

4. A trade agreement

The correct answer is: A tax on imports

A tariff is best described as a tax on imports. This tax is levied by a government on goods brought into the country from abroad. The primary purpose of a tariff is to protect domestic industries by making imported goods more expensive, thereby encouraging consumers to buy locally produced products. Tariffs can also serve to generate revenue for the government and regulate trade balance with other countries. The nature of a tariff is specifically focused on imports, distinguishing it from a tax on exports or other regulatory measures that may influence trade but do not fall under the definition of a tariff. Understanding this distinction helps clarify the role tariffs play in international trade and economic policy.