Protectionism Flashcards
1
Q
Protectionism
A
Approach by the gov to protect domestic producers
2
Q
Dumping
A
Where an overseas firm sells large quantities of a product below cost in the domestic market
3
Q
Trade barriers
A
Measures designed to restrict imports
4
Q
Infant industries
A
New industries yet to establish
5
Q
Methods of protectionism
A
- Embargo
- Quota
- Tariffs/custom duties
6
Q
Embargo
A
Official order to stop trade with another trade
7
Q
Quota
A
Physical limit on the quantity of imports allowed into a country
- May limit consumer choice
Domestic producers may be over protected and fail to improve efficiency
8
Q
Tariffs/custom duties
A
Tax on imports to make them more expensive
- if set too high, imports may cease and gov tax will be 0
- in the short term, customers won’t benefit from tariffs due to price
9
Q
Reasons for protectionism
A
- Prevent dumping
- Protect employment
- Protect infant industries
- Gain tariff revenue
- Prevent harmful goods from entering
- Reduce CAD
- Retaliation
