Question

A. Identify the difference between fair trade and free trade?

B. Define the Term trade tariffs and explain how they impact the economy?

Answer 1

(A) Difference between fair trade and free trade

1. The main objective of free trade is , It plays a key role in increasing the economic growth of the nation while Fair trade improves the quality of people's living and marginalized them
2. Free trade means minimum or no government rules and regulations on the business  on any of the matter such as payment of minimum wages, salaries, labour cost , tarrifs etc. while fair trade means proper rules and regulations of the government in the business. The government will take care with itself in such matter likes wages, tarrifs etc
3. Free trade is mainly beneficiary for those who have the business of export and import while fair trade mainly benifits to those who have small scale business having limited economic ability.
4. Free trade Brings change in the society through policies of the government while Fair trade Brings changes developement of the community

(B) Trade tarrifs

Defination -  Trade tarrifs are the taxes which are paid or charged at the border while importinh goods from foriegn countries. The person who import the goods from other country paid the tariffs at the time of import in the custom office.These are mainly imposed to limit the goods which are imported from foriegn country in the increasing numbers.

How trade tarrifs impact the economy?

1. Low competion to domestic producers- The domestic peoducers within the country faces less competition on imposing tarrifs and which ultimately results in rise in the price which can be sold at low cost in the market.
2. Government earns revenue - Through imposing trade tarrifs government earns huge amount or revenue, which can reduce the burden of taxes on society
3. increase in employment- When government will impose tarrifs of foreign goods to limit the imports this will create opportunity for the domestic producers to sell and establish their place in the market. Increase in demand of their products will result in increased production for which they need more workers.
4. Decline in the economy - when imposing trade tarrifs, domestic producers increases price of ther goods , which results in decline customer's income. Hence they will buy less amount of goods which creates decline in the economy.

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