Protectionism

Question 1

What’s protectionism

Answer 1

When a government protects domestic businesses and jobs from foreign competition

Question 2

3 ways of protectionism

Answer 2

1) Tariffs and quotas
2) Government legislation
3) Domestic subsidies

Question 3

What’s a tariff

Answer 3

A tax that has to be paid when certain products are imported into a country

Question 4

What’s an import quota

Answer 4

Trade restrictions set by governments that put limits on volume of particular products that can be imported into a country in a certain time period

Question 5

What do tariffs and quotas therefore do

Answer 5

Discourage international trade by making imported products more expensive than domestic products or limiting how much can be brought into a country

Question 6

Advantages and disadvantages of tariffs and quotas

Answer 6

Advantages= -Help domestic firms grow as they face less competition from foreign firms

Disadvantages= -Restrict consumer choice and means consumers might have to pay more for products than they would do otherwise
- Lack of competition removes incentive for domestic firms to improve efficiency and quality

Question 7

How does government legislation restrict international trade

Answer 7

• Trade sanctions= Which strongly restrict trade with a certain country
• Trade embargoes= Ban Trade with a country altogether. E.g. USA has had an embargo against Cuba since 1962

Question 8

What can trade sanctions and trade embargoes cause

Answer 8

• Can make trade extremely difficult and expensive
• Can cause retaliation - another country might respond by restricting trade with your country
• This can restrict a country’s development, as they cannot make money by exporting goods

Question 9

What are domestic subsidies

Answer 9

Sums of money provided by the government to domestic firms in a certain industry (e.g. steel)

Question 10

How do domestic subsidies increase protection for domestic businesses

Answer 10

• Subsidies reduce production costs, allowing domestic products to have lower prices than imports. E.g. farmers get subsidies to ensure income without having to increase prices

Question 11

A disadvantage of government subsidies

Answer 11

• It costs the government money, which might mean people living in the country face higher taxes to fund the subsidies

Question 12

Protectionism can help do what

Answer 12

Boost an economy

Question 13

What is protectionism

Answer 13

When a government protects domestic businesses and jobs from foreign competition