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What are trade policies?
• Strategies a country uses to manage international trade, either encouraging or restricting it.
What are restrictive trade policies?
• Measures like tariffs and import quotas that limit trade to protect domestic industries.
What are tariffs?
• Taxes on imports that raise their cost, protect domestic industries, and generate revenue.
What are import quotas?
• Limits on the quantity of imports to restrict foreign market penetration.
What is import substitution?
• A strategy that focuses on producing goods domestically instead of importing them.
What is export promotion?
• Encouraging exports through incentives to strengthen the economy.
What are price-related trade restrictions?
• Tariffs that increase import prices to protect local industries.
How do tariffs work?
• They tax imported goods, making them more expensive and reducing demand.
What are the key impacts of tariffs?
• Protect local industries and generate government revenue.
What is the formula for tariff revenue?
• Revenue = Quantity of Imports × Tariff Rate
What are quantity-related trade restrictions?
• Import quotas that limit the number of goods that can enter a country.
What is the key impact of import quotas?
• Protect domestic production but do not generate revenue like tariffs.
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.
What is the goal of import substitution?
• To replace imports with domestically made products.
How does import substitution benefit a country?
• Protects infant industries and increases tariff revenue.
What is the goal of export promotion?
• To increase exports by supporting domestic industries.
How does export promotion help an economy?
• Generates foreign exchange and improves global competitiveness.
