Protectionism · AS Level Economics

Which measure would not be part of a government subsidy to protect domestic producers from competition?

• Aimport quotas
• Binterest-free loans provided by the government
• Creductions in profits (business) taxes
• Dfinancial help given to local firms

Which government measure would reduce protectionism?

• Aan increase in product safety standards
• Ban increase in subsidies to domestic firms
• Can increase in the level of import quotas
• Dan increase in the rate of import duties

Which policy will lead to a fall in the volume of goods imported?

• Aa cut in income tax rates
• Ba cut in interest rates
• Can increase in import tariffs
• Dan increase in spending on training workers in domestic tourism

A government increases the import tariff on food products.

What will be the impact on consumer surplus and price?

consumer price surplus

• Afalls falls
• Bfalls rises
• Crises falls
• Drises rises

What is not an example of protectionism?

• Aa ban on imports of chicken products
• Bimport tariffs on agricultural products
• Cmaximum supermarket food prices
• Dstrict health and safety requirements for imported products

What is not an argument for protectionist policies?

• Ato improve the current account of the balance of payments
• Bto improve the terms of trade
• Cto reduce the rate of domestic inflation
• Dto protect strategic industries

Which action increases and which action decreases the level of protectionism?

increases protectionism decreases protectionism

• Aimposing an embargo reducing subsidies to domestic producers
• Bimposing exchange controls lowering quota levels
• Cintroducing voluntary increasing subsidies to export agreements domestic producers
• Dremoving quotas introducing embargos

Countries X and Y both produce and trade in good Z.

What may cause a reduction in quantity supplied by domestic producers of good Z in country X?

• Aa quota on imports of good Z into country X
• Ba subsidy on exports of good Z from country Y
• Ca tariff on imports of good Z into country X
• Dextra regulations on imports of good Z into country X

In which economic context is the term ‘protectionism’ usually applied?

• Athe protection of consumers against excessive prices
• Bthe protection of employees against exploitation by multinational companies
• Cthe protection of local producers against international competitors
• Dthe protection of the foreign exchange rate against currency speculators

Which statement correctly describes a tariff?

• AIt is a complete ban on imports.
• BIt is a minimum price for domestic producers.
• CIt is a payment to exporters.
• DIt is a tax imposed on imports.

Which statement is not a valid reason why a country may impose protectionist measures?

• Ato allow a newly developed domestic industry to grow to a viable size
• Bto enable a country to retain control of an industry it regards as being of strategic importance
• Cto give consumers a wider choice of goods and services
• Dto give time for workers in a declining domestic industry to find alternative employment

Which argument in favour of protectionism is not generally regarded as economically valid?

• AOnce the protected industry becomes established, it will produce efficiently.
• BIt prevents heavily subsidised imports from competing unfairly against domestic goods.
• CIt provides time for the protected industry’s workers to be retrained for other work.
• DIt increases the standard of living of the population in general.

A government increases the import quota of cars.

What is the likely effect of this?

• Ajobs will be created in the domestic car industry
• Bprices of cars will fall for domestic consumers
• Cspecialisation is reduced
• Dtrading partners will retaliate

, , 30 A country has a current account deficit.

What would be classified as a protectionist measure to restore the current account to equilibrium?

• Aallow the exchange rate to appreciate
• Bincrease income tax
• Cincrease import tariffs
• Dincrease the rate of interest

Explain the difference between trade embargoes and export subsidies and consider which is likely to be the more effective tool of protection. [8]

Assess whether the arguments against protectionism are stronger than the arguments for protectionism. [12]

With the help of a diagram, explain the effects of an export subsidy on the price and sales of imported Chinese EVs in the EU and consider an economic factor that could affect the size of any change. [4]

Explain one likely effect of the increase in tariffs on the value of imports into Argentina. [2]

Assess the extent to which either raising import tariffs or imposing import quotas is a better tool for protecting an economy from unfair competition. [12]

Explain two tools of protection used by a country when trading internationally and consider whether one is likely to have more of an impact on the country’s economy than the other. [8]

Assess whether all consumers, all producers and the government in a country will benefit equally from protectionism. [12]

Assess whether it is better to use protectionist policies or contractionary policies to reduce a deficit on the current account of the balance of payments. [12]

Using two tools of protection, explain what is meant by protectionism and consider the extent to which these two tools may benefit an economy. [8]

Assess whether the potential benefits of free trade always outweigh the arguments for protectionism. [12]