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Question

Explain two reasons why a government may impose a tariff on imported gold.

Quick Answer:

To discourage the purchase of foreign gold. The reduced demand for imported gold will help to improve the current account position on the balance of payments
To raise revenue to fund government expenditure. This increased revenue can be spent in the economy in order to promote economic growth. e.g more spending on education and training
If gold is an infant industry a tariff on gold would enable domestic industries to grow
The government may impose tariffs to allow the domestic gold industry to expand and protect related jobs
This may be a retaliation in response to trade restrictions on gold imposed by other countries

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