1.6 Restrictions on Free Trade Flashcards
(6 cards)
1
Q
What are trade barriers?
A
Restrictions on trade in the form of monetary and non-monetary
2
Q
Types of trade barriers?
A
1) Tariffs
2) Quotas
3) Subsidies
4) Product Standards
3
Q
Main reason for protectionism?
A
1- Prevent dumping (e.g. Chinese aluminium extrusions)
2 - Infant industries
3 - Protect employment
4
Q
Tariff diagram?
A
5
Q
Drawbacks of protectionism?
A
1 - Risk of retaliation
2 - Market distortions
3 - Higher prices + costs
6
Q
Reasons to prefer tariffs to quotas?
A
1) Govt revenue
2) Flexible
