Economics: Trade Barriers

Economics: Trade Barriers

By Jakata Shortt

Economics is all about the money!

Economic deals with the sales of goods and services.

This means that Economics deals with a lot of trade.

Open Ended

What is trade?

Trade is the buying and selling of goods and services.

People exchanging one thing for another.

Sometimes we have trade barriers to protect ourselves or others.

A trade barrier is the restriction or regulation of this exchange of goods and services between countries.

There are 3 different trade barriers we will learn this year:

Tariff, Quota, and Embargo

A tariff is a tax on goods or services being brought into a country.

Example: If I were to sell oranges in Canada, they may add a tariff on the oranges that I sell. So Canada they may add a $1 tax on each orange I sell there. This would make my oranges more expensive.

Multiple Choice

Which of the following is a tariff?

• a discount on goods or services

• an added tax on goods and services

• a coupon on goods and services

• a stop on goods and services

A quota is a fixed limit on the amount of goods and services a country can trade.

Example: Canada may limit the number of oranges I am allowed to sell there. They may do this to make sure that oranges sold buy Canadians will be bought too, not just mine.

An embargo is a ban on trade with a country.

Example: Canada could put an embargo on the United States which means I could no longer sell my oranges there.

Countries put embargoes on other countries if they don't like things they are doing or something that they believe.

An embargo is a ban on trade with a country.

Example: Canada could put an embargo on the United States which means I could no longer sell my oranges there.

Countries put embargoes on other countries if they don't like things they are doing or something that they believe.

Multiple Choice

Countries use embargoes to...

• punish other countries for doing something they don't like.

• encourage trade with other countries.

• give countries discounts on trading there.

• do not affect trade between countries.

A free trade zone is when there are no trade barriers like tariffs, quotas, or an embargo.

This doesn't mean you are getting things for free, it means that there are no limits or restrictions on trades being made.

Poll

When trading snacks with your friends, which would you prefer?

• tariffs

• quotas

• an embargo

• free trade

Multiple Choice

A quota is a limit on an imported good. Which is an example of a quota helping local farmers?

• Taxing corn from another country.

• Allowing less corn to be bought from other countries' farms.

• To stop buying corn from another country

Multiple Choice

What is a tariff?

• Tax on imported goods

• To stop trading with a business or country

• A limit on imported goods