Protectionism

Question 1

Protectionism

Answer 1

Implementing policies that will protect an economy through restrictions of imports

Question 2

Tariffs

Answer 2

A tax on imported goods or services

Question 3

Quotas

Answer 3

Limit on the physical number of exports allowed into a country

Question 4

Exports subsidies

Answer 4

A government provides subsidises for firms which produce exports

Question 5

Arguments for protectionist policies

Answer 5

Protection of jobs

Infant industry- a small industry which is developing but cannot yet benefit from economies of scale

Anti dumping

Sunset industries- industries in long term decline may benefit from protection so as it allow them to decline gradually instead of suddenly - minimising demand side shocks

Strategic reasons government may wish to keep industries running despite cheaper imports- due to the industries importance e.g. Agriculture

Question 6

dumping

Answer 6

Dumping is where a low cost producer “dumps” large quantities of a product onto another countries market below cost price

Often leads to the closure of local firms that cannot compete with the low cost producer