S3 Trade Barriers

S3 Trade Barriers

Recap of Trade Barriers an why they are used

Lesson Aims

• Recap the Global Trade - free trade

• Trade Barriers/Protectionsm

• Fors and against of Trade Barriers

Multiple Choice

All of the following are likely benefits to an economy of free trade except which one?

• Small or infant industries domestically are protected

• Businesses can better achieve economies of scale

• Businesses are encouraged to grow beyond their domestic borders

• Economy can benefit from specialisation

Multiple Choice

The use of trade barriers to restrict access to an economy is known as:

• Tariff Barriers

• Protectionism

• Open Trade

• Trade wars

Multiple Choice

Which of the following is the best description of the concept of protectionism?

• Policies designed to encourage the flow of international investment

• Economic policies designed to reduced demand for exports

• Any attempt by a country to impose restrictions on trade in goods and services

• The use of import quotas to restrict quantities of imported goods into an economy

Global Trade

Free trade – International Trade without barriers.

Protectionism – when countries put up barriers to prevent free trade.

Trade Barriers

Types of Trade Barriers

Multiple Choice Questions

Multiple Choice

Physical limit on the quantity of a good that can be imported into a country

• Embargo

• Quota

• Tariff

• Subsidy

Multiple Choice

A complete ban on importing a good perhaps done on grounds of consumer protection

• Subsidy

• Tariff

• High Standards

• Embargo

Multiple Choice

Financial assistance provided by the government to support economic activities (home industries) that it wishes to encourage

• Subsidy

• Quota

• Tariff

• Embargo

Multiple Choice

A custom duty (tax) levied on the value of imported goods entering a country is known as:

• Quota

• Tariff

• Import Subsidy

• Legislation

Multiple Choice

When set regulations are imposed on the any goods that are imported for example minimum requirements on safety, this is an example of:

• Tariff

• Embargo

• High Standards

• Subsidy

Trade Barriers

Advantages and disadvantages

Multiple Choice

Two likely consequences of of the introduction of significant tariffs on imports of electonic goods would be:

• Lower prices of those goods & higher demand for them

• Higher prices of those goods & higher demand for them

• Higher prices of those goods & lower demand for them

• Lower prices of those goods & lower demand for them

Multiple Choice

An argument in favour of imposing higher trade barriers is that they may:

• Result in greater customer choice

• Discourage foreign direct investment

• Protect small or new industries

• Encourage more imports

Reasons for Trade Protectionism

•Protects Jobs – imports may put too many people out of business.

•Improves Balance of payments – less imports.

•To protect infant industries – keep foreign competition out until they can compete (if they ever do!).

•To prevent dumping

•To protect strategic industries – agriculture.

•To prevent the import of harmful products

Arguments against protectionism

Higher prices for consumers

Reduction in access to markets for producers

Extra costs for exporters

Reduction in potential specialisation

Potential retaliation and trade wars

Multiple Choice

A possible drawback of introducing barriers to trade such as quotas and tariffs is that:

• Other economies affected will retaliate

• The prices of imported goods will fall

• Domestic firms will increase their market share of the domestic market

• Consumers will benefit from lower prices of imported goods

Success Criteria

• I can describe the different barriers to trade

• I can explain how different barriers to trade work

• I can describe reasons for using trade barriers

• I understand the advantages and disadvantages of barriers to trade