Theme 4 - Protectionism

Question 1

What is protectionism?

Answer 1

when a government protects domestic businesses and jobs from foreign competition

Question 2

What is a tariff?

Answer 2

A tax that has to be paid when certain products are imported into a country

Question 3

What is an import quota?

Answer 3

Trade restrictions set by governments that put limits on the volume of particular products that can be imported into a country in a certain time period

Question 4

What do tariffs and quotas do?

Answer 4

Discourage trade by making imported products more expensive than domestic products or limiting how much can be brought into a country

Question 5

Benefits of tariffs and quotas for domestic firms

Answer 5

Face less competition for foreign firms

Question 6

Limitations of tariffs and quotas for domestic firms?

Answer 6

Lack of competition removes the incentive to improve efficiency and quality

Question 7

What does a government legislation restrict?

Answer 7

International trade

Question 8

Examples of government legislation and what they do

Answer 8

Trade sanctions- restrict trade within a certain country
Trade embargoes- ban trade with a country altogether

Question 9

What do trade sanctions and embargoes restrict

Answer 9

A country’s development, as they can’t make money by exporting goods

Question 10

What is a domestic subsidy?

Answer 10

Sums of money provided by the gov to domestic firms in a certain industry

Question 11

Benefits of a domestic subsidy

Answer 11

Reduce production costs which enables lower prices than imports

Question 12

Limitation of domestic subsidies

Answer 12

Costs gov money. People living in the country may face higher taxes to fund subsidies