Globalisation And Trade Restrictions (continued)
Overview
Free trade lets countries specialise and buy goods more cheaply from abroad, yet almost every government still puts up barriers against some imports. Why? Behind each tariff or quota lies an argument, protecting new industries, saving jobs, guarding against unfair dumping, or raising revenue, and each argument has a counter-argument.
In this lesson you will work through the full set of reasons governments restrict trade, from protecting infant and strategic industries to discouraging demerit goods and protecting the environment. You will analyse the impact of restrictions on the home country and its trading partners, and weigh the advantages against the disadvantages. By the end you will be able to argue both sides and reach a judgement, exactly what evaluation questions demand.
Objectives
- protect infant (sunrise) industries
- protect declining (sunset) industries
- protect strategic industries
- avoid dumping
- reduce a deficit on the current account of the balance of payments
- raise tax revenue
- restrict the import of demerit goods
- promote environmental sustainability
- impact of trade restrictions on the home country and its trading partners
- advantages and disadvantages of restricting free trade
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Lesson Evaluation
Congratulations on completing the lesson on Globalisation And Trade Restrictions (continued). Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- A tariff is best described as: A. a limit on the quantity of imports B. a tax on imported goods C. a subsidy to exporters D. a ban on imports Answer: B
- Protecting a new, unestablished industry from foreign competition is the: A. dumping argument B. strategic industry argument C. infant (sunrise) industry argument D. revenue argument Answer: C
- Selling exports below their cost of production to capture a foreign market is called: A. a quota B. dumping C. a tariff D. an embargo Answer: B
- A likely disadvantage of imposing tariffs is that: A. consumers enjoy lower prices B. trading partners may retaliate with their own barriers C. government revenue falls D. domestic firms become more efficient Answer: B
- Which is a NON-tariff barrier to trade? A. a tax on imports B. an import quota C. an income tax D. an interest rate cut Answer: B
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