In an effort to protect domestic industry, Congress is considering implementing a quota or a tariff. If both options reduce imports from 1 billion a year to 500 million a year, which option should Congress select and why?
A. Congress should select the tariff because it will have less of a negative impact on domestic consumers
B. Congress should select the quota because it will have less of a negative impact on domestic consumers
C. Congress should select the quota because it will generate government revenue
D. Congress should select the tariff because it will generate government revenue
D. Congress should select the tariff because it will generate government revenue.
Tariffs are taxes imposed on imported goods, and as a result, they generate revenue for the government. This revenue can be used to support domestic industries or fund other government initiatives. Quotas, on the other hand, impose limits on the quantity of imported goods, but they do not directly generate revenue for the government. Therefore, selecting the tariff option would provide a means for Congress to protect domestic industry while also generating additional revenue for the government.