A Level - Free Trade & Protectionism

What is a potential benefit of free trade?

• More employment in sunrise industries

• Specialization in commodity production

• Less unemployment in sunset industries

• Access to goods that are not produced in the domestic market

With free trade, prices will ...

• Increase from P1 to P

• Decrease from P to P1

• Stay at P

• Not change

With free trade, quantity consumed will ...

• Decrease from Q to Q2

• Increase from Q to Q1

• Decrease from Q1 to Q2

• Stay at Q

With free trade, local production will ...

• Decrease from Q to Q2

• Increase from Q to Q1

• Decrease from Q1 to Q2

• Stay at Q

With free trade, quantity imported will be ...,

• Q-Q1

• Q-Q2

• Q2-Q1

• Zero

Agreement that will eliminate all tariffs and other trade barriers between Canada, Mexico, and the USA.

• EU

• NAFTA

• ASEAN

• APEC

The use of trade barriers to protect a nation’s industries from foreign competition.

• Balance of payment

• Free trade agreement

• Specialization

• Protectionism

The U.S. president decreased the amount of imported peanuts allowed into the country only 100 million pounds per year.

• Tariff

• Quota

• Embargo

• Subsidy

What trade restrictions can make imported goods more expensive?

• Tariff

• Quota

• Embargo

• Subsidy

What is the impact of a quota on imported goods?

• Increase in government tariff revenue

• Product price will decrease

• Domestic supply will increase

• There will be efficiency gains