Free Trade

Question 1

What is free trade?

Answer 1

International trade without any restrictions

Question 2

Why would governments use trade barriers?

Answer 2

To protect jobs - if firms are outcompeted by foreign firms

To ban certain goods - firearms and drugs

To avoid over dependence - not rely to heavily on certain industries.

Question 3

What trade barriers are used?

Answer 3

Tariffs - imposed like tax - makes imports more expensive, therefore helping domestic producers and raising tax revenue

Quotas - limit the quantity of a certain good so any extra demand is produced domestically

Question 4

Advantages of international trade?

Answer 4

International trade - exchange of goods and services between countries

Gives countries access to resources and products they couldn’t produce and use otherwise

If countries specialise in production its best at producing - it increases global output