Multiple Choice
Which of the following is a potential drawback of government intervention in international trade?
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9. International Trade
Arguments Against International Trade
Multiple Choice
Which of the following is a reason that countries may pursue trade protection?
A
To protect domestic industries from foreign competition
B
To lower prices for domestic consumers
C
To increase consumer choice by allowing more imports
D
To promote free trade agreements
Verified step by step guidance1
Understand the concept of trade protection: Trade protection refers to government actions and policies that restrict or restrain international trade, often with the intent to protect domestic industries from foreign competition.
Identify the typical goals of trade protection: These usually include protecting domestic jobs, shielding emerging industries, and maintaining national security, rather than lowering prices or increasing consumer choice.
Analyze each option in the context of trade protection:
- 'To protect domestic industries from foreign competition' aligns with the primary goal of trade protection.
- 'To lower prices for domestic consumers' is generally a goal of free trade, not protection.
- 'To increase consumer choice by allowing more imports' contradicts trade protection, which limits imports.
- 'To promote free trade agreements' is the opposite of trade protection, as free trade agreements reduce trade barriers.
Conclude that the correct reason countries pursue trade protection is to shield domestic industries from foreign competition, as this is the fundamental purpose behind such policies.
Remember that trade protection often involves tariffs, quotas, or regulations designed to make imported goods less competitive compared to domestic products.
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