Trade Policy and Protectionism Concepts

The video explores the relationship between international trade and politics, focusing on how trade affects state governments. It distinguishes between free trade, characterized by competitive markets, and fair trade, which involves government intervention. The video discusses protectionist policies like tariffs and non-tariff barriers, and how domestic politics influence trade policy. It contrasts democracies and autocracies in terms of trade openness, explaining that democracies require larger coalitions, making them more open to trade. The video concludes with a discussion on the pros and cons of trade policies.

What is the primary focus of governments when they create trade barriers?

• To increase international competition

• To protect domestic industries

• To lower consumer prices

• To promote global trade

In a free trade scenario, what determines the price and quantity of goods?

• Consumer preferences

• International agreements

• Supply and demand

• Government regulations

Which of the following is a characteristic of free trade?

• Trade quotas

• Government subsidies

• Competitive markets

• High tariffs

What is a key difference between free trade and fair trade?

• Free trade involves government interference

• Fair trade is characterized by competitive markets

• Fair trade involves protectionist policies

• Free trade focuses on domestic markets

Why might a government impose tariffs on foreign goods?

• To reduce domestic production

• To increase export levels

• To encourage foreign investment

• To protect domestic producers

What is an example of a non-tariff barrier to trade?

• Import quotas

• Subsidies

• Health legislation

• Export taxes

What impact do protectionist policies have on domestic consumers?

• Higher prices

• Lower prices

• More competition

• Increased variety

How do special interest groups influence trade policy in democracies?

• By increasing import quotas

• By promoting free trade agreements

• By lobbying for protective legislation

• By reducing tariffs

According to the selectorate theory, why are democracies more open to trade?

• They have smaller coalitions

• They rely on private benefits

• They require larger coalitions

• They focus on niche industries

In representative democracies, what type of legislation is common in competitive districts?

• Export incentives

• International treaties

• Protective legislation

• Free trade agreements