4.1.4 Protectionism Flashcards
1
Q
Define protectionism
A
The practice of shielding a country’s domestic industries from foreign competition by taxing imports, imposing quotas or passing laws.
2
Q
Define tariff
A
A tax placed on an import to increase its price and decrease its demand
3
Q
What to tariffs increase?
A
Raises revenue and restricts imports
Raises final price to consumers = demand decreases
4
Q
Imposing tariffs helps countries to…
A
- Protect their fledging (new) domestic industries from foreign competition.
- Protect their ageing and inefficient industries from foreign competition.
5
Q
How can tariffs cause job losses?
A
If a business has to bay tariffs, they may have to reduce production causing job losses.
6
Q
3 main reasons why tariffs are imposed
A
- Raise tax revenue
- Environmental reasons - cigs
- Protectionism
7
Q
Advantages of tariffs
A
- Tax revenue
- Price advantage for domestic businesses
- Domestic goods do not incur the tariff and are likely to be cheaper
8
Q
Disadvantages of tariffs
A
- Some customers will still pay
- Increases cost to consumers
- Other counties may do the same
9
Q
Define quota
A
Physical limit on the quantity of goods imported/ exported
10
Q
Why are quotas imposed?
A
- It allows a country to be sure of the amount of the good imported from the foreign country.
- Quotas are predictable as the actual amount is known,
- To protect jobs of domestic producers
11
Q
Advantages of quotas
A
- protects domestic industries
- safeguards jobs in domestic industries
- benefit to customers as price of imported goods rise so domestic goods appear cheaper and better value in comparison.
12
Q
Disadvantages of quotas
A
- when one country uses quotas, it’s trading partners do the same and end result is less exporting opportunity for all pro users and higher prices
- requires lots of paperwork
- difficult to measure the precise degree of protection quotas offer.
