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Sometimes governments decide to restrict free international trade by imposing barriers such as tariffs - Leaving Cert Economics - Question b - 2008
Question b
Sometimes governments decide to restrict free international trade by imposing barriers such as tariffs. (i) Explain the underlined term. (ii) State two other metho... show full transcript
Worked Solution & Example Answer:Sometimes governments decide to restrict free international trade by imposing barriers such as tariffs - Leaving Cert Economics - Question b - 2008
Step 1
Explain the underlined term.
Answer
Tariffs are taxes imposed on imported goods. They are used by governments to increase the cost of foreign products, with the aim of making local goods more competitive. By raising the price of imports, tariffs can discourage consumers from buying them, thereby protecting domestic industries and generating revenue for the government.
Step 2
State two other methods which could use to restrict free trade.
Answer
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Quotas: These are limits set by governments on the amount of a specific product that can be imported, effectively controlling the volume of foreign goods entering the country.
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Embargoes: These are official bans on trade with specific countries, often imposed for political reasons.
Step 3
State and explain two reasons why governments may wish to restrict free trade.
Answer
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Protecting Domestic Industries: Governments may limit imports to protect young or developing industries from international competition, allowing them to establish themselves without being overwhelmed by foreign corporations.
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Protecting Domestic Employment: By restricting free trade, governments can safeguard jobs that might be threatened by competition from cheaper foreign labor markets. This helps to maintain employment levels within the country.