Theme 4 - 1.4 protectionism

Question 1

What is protectionism ?

Answer 1

Protecting an economies domestic industries by imposing trade barriers.

Question 2

What is a tariff ?

Answer 2

A tax imposed on imported goods, in turn increasing prices and reducing demand for imported goods.

Question 3

What are the advantages of tariff ?

Answer 3

• Protects domestic industries.
• Prevents structural unemployment.

Question 4

What are the disadvantages of tariffs ?

Answer 4

• Price inelastic products do not see significant change in demand.
• Other countries may retaliate.

Question 5

What is an import quota ?

Answer 5

• A maximum limit of goods that a country can export or import.

Question 6

What are the advantages of import quotas ?

Answer 6

• Protects domestic employment.

Question 7

What are the disadvantages of import quotas ?

Answer 7

• Other economies may retaliate and impose their own barriers.
• Consumers pay higher prices.

Question 8

What are the other forms of trade barriers ?

Answer 8

Government legislation.
Domestic subsidies.