1. Three policies used to restrict trade are: tariffs, quotas,
and regulatory trade restrictions. Discuss each of these
policies.
2. There are four main reasons why economists typically oppose
the use of trade restrictions. (1). From a global perspective, free
trade increases total output. (2). International trade provides
competition for domestic companies. (3). Restrictions based on
national security are often abused. (4). Trade restrictions are
addictive. Discuss each of these reasons.
Why do most countries impose restrictions on trade with other
countries? If the theory states that free-trade across borders
generally leads to lower prices and increased benefits for
consumers and producers, why don’t governments just leave trade
alone?
The North American Free Trade Agreement (NAFTA) has
_______________ trade among Canada, the United States, and
Mexico.
decreased
had no effect on
increased
none of the above
Explain the infant industry argument for the trade
restrictions. (TYPE IT!!)
Why do the economists doubt that the infant industry argument
is a good argument for the trade restrictions? Explain in your own
words. (TYPE IT!!)
Under what conditions the infant industry argument for the
trade restrictions may be a good argument? Explain. (TYPE IT!)