Question

4. Check each of the following arguments made for trade "protections."

		fiscal policy
		lower prices
		domestic employment
		infant industry
		higher prices
		military self-sufficiency
		America hates other countries
		protecting the domestic standard of living
		Steven Manley said protections are needed

Answer 1

The concept used here is of policies used by a nation to steer the economy.

let's get started,

We have to keep in mind that as per the question,

The American government is function in the closed economy and want to increase the domestic industry and protect it from global forces.

Fiscal Policy - The fiscal policy which is a measure of government spending and their revenue collection in the form of taxes. So considering America closed economy as per the question the fiscal policy adopted would be Expansionary Fiscal policy which will increase government spending and lower taxes which will increase consumption but since the economy is closed the consumption demand will be met by domestic producers which in turn would benefit the economy.

Domestic Employement - Since, the demand will be met by domestic producers so the workforce would be potentially employed which will drastically reduce the nation's unemployement.

Infant Industry - The infant industry gets protected economy to function and grow so these industries will grow and gets ready to compete in global markets in future.

Prices - Initally the prices might be higher due to high production cost as compared to global level as the economy prepares itself to achieve competency in manufacturing but gradually it also increases its production base and tries to acheive economy of scale which inturn would decrease the production cost and then transfer its benefit to customers.

Militiary Self Sufficiency - means that nation should produce the defense good for itself rather than being dependent on other miltiary goods producing nation. Miltiary goods do have a potential share of the government spending so the economy which wants to grow domestically must have strong defensive research and development department.

Standard of living - The standard of living would be expensive initially as the consumers would now won't be having variety produced by cost efficient nation but overall in the long run the economy will boost until it matures to compete in global economy.

But there must be consideration that forcing the trade restrictions won't help economy beyond a stage where the economy develops and is on the maturity stage, it must compete in global economy and have benefits of free trade.