Trade Barriers/Policies

Question 1

Administrative barriers

Answer 1

Non-tariff barriers designed to stop or slow imports.

Question 2

Embargo

Answer 2

Restriction on trade imposed by a foreign country. It could be set on a product or even as a ban on an entire nation.

Question 3

Import Substitution

Answer 3

Government targets a particular industry with the goal to switch production from abroad to the domestic economy.

The government may levy high tariff barriers or quotas to discourage imports into the domestic economy.

Question 4

Protectionism

Answer 4

A set of policies designed to protect domestic firms from the competition of foreign firms in the domestic firms market. This includes policy action such as tariffs, quotas and subsidies.

Question 5

Export Promotion

Answer 5

Any policy that supports domestic industries so that they become exporting industries.

Question 6

Quota

Answer 6

Physical limit on the volume of a particular good entering the country from abroad.

Question 7

Tariff

Answer 7

Tax on imports.

It encourages consumers to switch away from the consumption of imports and towards local goods.

Tariffs increase price and reduce quantity and choice

Question 8

Trade Diversion

Answer 8

By joining a trade agreement, a country moves its trade from a low-cost producer to a high-cost producer.

This may be the result of protectionist barriers against the low-cost producer that are included in the agreement.

Question 9

Trade Liberalisation

Answer 9

Decreasing barriers to trade with other nations.

Question 10

Trade Policies

Answer 10

The regulations and agreements that control imports and exports to foreign countries.

This may include protectionism as well as trade agreements that create trading blocs.

Question 11

Consequences of trade barriers: Trade War

Answer 11

Economic conflict resulting from extreme protectionism in which states raise or create tariffs, or other trade barriers, against each other in response to trade barriers created by the other party.

Question 12

Trading Bloc

Answer 12

Agreement between nations to form a region in which trade and cooperation take place more freely.

One key objective is to increase economic efficiency by increasing competition between producers in the region.

Question 13

Venture Capital

Answer 13

Capital invested in a project in which there is a substantial element of risk, typically a new or expanding business.