ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Protect Foreign Producers
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Protect Foreign Consumers
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Protect Domestic Producers
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Protect Domestic Consumers
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Detailed explanation-1: -Trade restrictions are typically undertaken in an effort to protect companies and workers in the home economy from competition by foreign firms. A protectionist policy is one in which a country restricts the importation of goods and services produced in foreign countries.
Detailed explanation-2: -Governments three primary means to restrict trade: quota systems; tariffs; and subsidies. A quota system imposes restrictions on the specific number of goods imported into a country. Quota systems allow governments to control the quantity of imports to help protect domestic industries.
Detailed explanation-3: -Within a country, the domestic price of a product will equal the world price if the country allows for free trade. The statement is true.
Detailed explanation-4: -Trade barriers are often enacted to protect industries and workers within a country. This is referred to as protectionism. For example, tariffs, quotas and embargoes make foreign goods more expensive and less available.
Detailed explanation-5: -There are four types of trade barriers that can be implemented by countries. They are Voluntary Export Restraints, Regulatory Barriers, Anti-Dumping Duties, and Subsidies. We covered Tariffs and Quotas in our previous posts in great detail.