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Chapter 21: Q 48. (page 523)

Why might a tax on domestic consumption of

resources critical for national security be a more

efficient approach than barriers to imports?

Short Answer

Expert verified

Domestic tax reduces the wastage of goods.

Step by step solution

01

Step 1. Definition

Tax is defined as the contributions by individuals and corporations to a government, by which the government finances activities for people like Medicare, social security, etc.

02

Step 2. Explanation

When a government taxes on domestic consumption it preserves the availability of wealth for national security purposes, it also reduces the inefficient use of resources and the country can operate in an effective and useful manner.

Because of this when the supply of imports is reduced due to tariffs on the import of goods and services the country can produce the effective level of output by the given resources.

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