4.1.6 restrictions on free trade Flashcards
1
Q
What are some reasons for countries seeking to restrict free trade?
A
- Infant industries
- - Young industries are unlikely to be able to compete against established Multinational companies - To prevent dumping
- Externalities
- Balance of Payments
- - Placing restrictions on imports
2
Q
What are some methods which countries may use to restrict free trade?
A
- Tariffs
- Quotas
- Subsidies
- Embargoes
3
Q
How could quotas be used to restrict imports?
A
A physical limit on the volume of imports entering a country
4
Q
How could subsidies be used to restrict import?
A
- Government payments to domestic firms
- To help reduce production costs
- Improve competitiveness
5
Q
What are some non-tariff barriers which could be used to restrict free rate?
A
- Countries might employ measures to discourage imports by raising costs
- Health and safety inspections
- Specific product specifications
6
Q
What is the impact of restricting free trade on consumers?
A
- They are likely to face higher prices
- Less choice as a result of protectionism.
7
Q
What is the impact of restricting free trade on producers?
A
- Higher costs
8
Q
What is the impact of restricting free trade on governments?
A
- Gain higher revenue
