Free Trade and Protectionsim

Which of the following is a key reason governments impose trade protection?

• To increase consumer surplus

• To protect domestic employment

• To ensure cheaper imports

• To encourage globalization

What is the "infant industry" argument in favor of protectionism?

• Protection should be permanent for all domestic industries

• New industries need temporary protection to develop economies of scale

• Developed economies should restrict trade with developing economies

• Large firms should be protected from competition

How does trade protection help maintain national security?

• By reducing reliance on imports for essential goods

• By allowing firms to maximize profits globally

• By increasing exports to allied nations

• By reducing tariffs on technology imports

Which protectionist measure directly restricts the quantity of an imported good?

• Tariff

• Subsidy

• Quota

• Exchange rate controls

Which argument in favor of protectionism is primarily concerned with preventing unfair competition?

• National security

• Dumping prevention

• Balance of payments improvement

• Environmental protection

What is a potential long-term downside of protecting declining domestic industries?

• They become more innovative

• They may become inefficient and reliant on government support

• They increase consumer welfare

• They improve international trade relations

Define protectionism and provide one example of a trade protection measure.

(a)  

Explain how trade protection helps reduce structural unemployment.

(a)  

Describe how tariffs protect domestic producers.

(a)  

Why might trade protection be justified for environmental reasons?

(a)