T1 Free Trade and Protection 4+5 PPT Flashcards
What is a tariff?
A tax on imports that increases the price of foreign goods.
Why are tariffs used?
To help domestic producers compete by making foreign goods more expensive.
How do tariffs benefit the government?
They generate tax revenue that can be used for public services like healthcare and education.
What is an example of a tariff in Australia?
Australia used to place tariffs on motor vehicles and clothing to protect local industries (e.g. Holden, Ford).
What is a subsidy?
A grant or payment from the government to domestic producers.
❓ How are subsidies funded?
❓ How are subsidies funded?
They are paid using government tax revenue
How do subsidies help domestic producers?
They lower production costs, making local goods more competitive against imports.
Why do governments provide subsidies?
To encourage local production and support industries facing foreign competition.
What is an example of subsidies in Australia?
The Australian motor vehicle industry (e.g. Holden) received subsidies to stay competitive.
