ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If domestic industries cannot compete against foreign industries, the government will restrict trade to help the domestic industries develop. Governments may also restrict trade to foster business at home rather than encouraging business to move out of the country.

Detailed explanation-2: -Negative effects of trade restriction. Trade restrictions benefit one party and raise costs for the other. The main problems caused by trade restrictions are higher prices for consumers, lower quantities of supply, and deadweight losses.

Detailed explanation-3: -Many countries restrict imports in order to shield domestic markets from foreign competition. Such behavior is known as protectionism. Countries do this mainly to satisfy political demands at home. There are many types of trade barriers.

Detailed explanation-4: -Protectionism refers to government policies that restrict international trade to help domestic industries. Protectionist policies are usually implemented with the goal to improve economic activity within a domestic economy but can also be implemented for safety or quality concerns.

Detailed explanation-5: -Advantages to trade protectionism include the possibility of a better balance of trade and the protection of emerging domestic industries. Disadvantages include a lack of economic efficiency and lack of choice for consumers. Countries also have to worry about retaliation from other countries.