Trade policies and strategies

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17 Terms

1

What are trade policies?

• Strategies a country uses to manage international trade, either encouraging or restricting it.

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2

What are restrictive trade policies?

• Measures like tariffs and import quotas that limit trade to protect domestic industries.

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3

What are tariffs?

• Taxes on imports that raise their cost, protect domestic industries, and generate revenue.

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4

What are import quotas?

• Limits on the quantity of imports to restrict foreign market penetration.

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5

What is import substitution?

• A strategy that focuses on producing goods domestically instead of importing them.

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6

What is export promotion?

• Encouraging exports through incentives to strengthen the economy.

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7

What are price-related trade restrictions?

• Tariffs that increase import prices to protect local industries.

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8

How do tariffs work?

• They tax imported goods, making them more expensive and reducing demand.

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9

What are the key impacts of tariffs?

• Protect local industries and generate government revenue.

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10

What is the formula for tariff revenue?

Revenue = Quantity of Imports × Tariff Rate

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11

What are quantity-related trade restrictions?

• Import quotas that limit the number of goods that can enter a country.

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12

What is the key impact of import quotas?

• Protect domestic production but do not generate revenue like tariffs.

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13

Why do countries impose trade restrictions?

• To protect domestic jobs, infant industries, and national security, and to maintain standard of living and equalize production costs, cultural values.

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14

What is the goal of import substitution?

• To replace imports with domestically made products.

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15

How does import substitution benefit a country?

• Protects infant industries and increases tariff revenue.

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16

What is the goal of export promotion?

• To increase exports by supporting domestic industries.

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17

How does export promotion help an economy?

• Generates foreign exchange and improves global competitiveness.

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