4.1.4 Protectionism Flashcards
1
Q
What is protectionism?
3
A
- Preference to dom producers
- Opposite of free trade
- Trade barriers
2
Q
When does the government use tariffs?
2
A
- Protect declining industry
- Protect infant industries
3
Q
What is the main benefit of tariffs/quotas?
1
A
- ^Tax rev, gov spending^ on public services
4
Q
What are the drawbacks of tariffs?
2
A
- ^Prices, >consumer ability to buy, >standard of living
- Inefficient firms survive, no incentive to improve
5
Q
What is a pro and con of quotas?
2
A
- > Unemployment
- ^Prices dom for consumers
6
Q
How can government legislation act as a barrier to imports?
2
A
- Stronger standards for safety = products illegal
- Forces diff design (long)
7
Q
What is a subsidy?
1
A
- Payment made by gov to firm producing product or located in particular area
8
Q
Drawbacks of paying subsidies?
2
A
- Artificially inflating prof margins of inefficient firms
- Gov ^tax
9
Q
What is structural unemployment?
1
A
- Long term unemployment, fundamental economic shift
