ECONOMICS (CBSE/UGC NET)

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ECONOMICS

BARRIERS TO TRADE

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Company XYZ produces cheese in Scotland and exports the cheese, which costs $100 per pound, to the U.S. A 20% tax would require company XYZ to pay the United States government $20 to export the cheese
A
Tariff
B
Embargo
C
Quota
D
None of the above
Explanation: 

Detailed explanation-1: -Tariffs are used to restrict imports. Simply put, they increase the price of goods and services purchased from another country, making them less attractive to domestic consumers.

Detailed explanation-2: -A free trade agreement is a pact between two or more nations to reduce barriers to imports and exports among them. Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.

Detailed explanation-3: -Common examples of protectionism, or tools that are used to implement a policy of protectionism include tariffs, quotas, and subsidies. All of these tools are meant to promote domestic companies by making foreign goods more expensive or scarce.

Detailed explanation-4: -Nontariff barriers include quotas, embargoes, sanctions, and levies.

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