O-LevelEconomicsInternational trade and globalisation2281/11 · Oct/Nov 2010 · Q271 Mark
In September 2008, the Chinese government increased the sales tax on cars with large engines whilst it reduced the sales tax on cars with small engines. Most cars in China with large engines are imported whilst most cars with small engines are home produced. Which effects would the changes in sales tax be expected to have on China's trade surplus and the demand for home produced cars? trade surplus demand for home produced cars A increase increase B increase reduce C reduce increase D reduce reduce
Aincrease increase
Bincrease reduce
Creduce increase
Dreduce reduce
✓ Correct answer
A: increase increase
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