Protectionism Flashcards
Lower output and living standards (analysis)
Protectionism means goods aren’t produced on the basis of comparative advantage, so there would be a fall in total world output, choice and living standards
Lower output and living standards (Evaluation)
How big are the protection measures? - if only on one industry then the fall in living standards would be insignificant
Rise in price and loss of consumer surplus (analysis)
Less demand
Loss of consumer surplus
Additional producer
2 DWL areas
Rise in price and loss in consumer surplus (evaluation)
Depends on PES and PED of curves
Depends on the size of the tariff
Rise in cost-push inflation (analysis)
A tariff will raise in the price of imposters goods bought by domestic producers, cost of production increases
Rise in cost-push inflation (evaluation)
Depends on which imported goods are effected
Are they on raw materials?
Fall in unemployment (analysis)
As demand switches away from foreign goods and towards domestic goods - rise in employment
Fall in unemployment (evaluation)
Depends on the elasticity of the AS curve (where in the business cycle)
Greater income equality (analysis)
Poorer households pay larger proportions of the income on tariffs
Greater income equality (evaluation)
If gov uses tariff to redistribute wealth
Or greater tax credit for low income households
Define tariffs
A tax imposed on imports
Define quotas
A limit on the volume of imports allowed into a country
Define export quotas
A grant of money from the gov to an industry
What is the intention of a tariff
To make foreign goods more expensive, so less price competitive
What is the intention of a quota
To restrict the flow of imports but without directly changing the price
