Trade Barriers Vocabulary Flashcards

Questions and Answers

What is an embargo?

A tax on imported goods

A grant of money from the government

A rule that restricts commercial trade (correct)

A proportion or share

What is the purpose of implementing a quota?

To limit how much of a good can be imported

What type of trade barrier is explicitly used for political purposes?

Embargoes

Which country has the United States imposed an embargo on since 1960?

Cuba Signup and view all the answers

What do quotas and embargoes have in common?

They both set limits on imported goods Signup and view all the answers

What is the role of subsidies in trade?

They act as trade barriers Signup and view all the answers

How do tariffs and subsidies relate?

Both are types of incentives Signup and view all the answers

Which type of incentive makes it more profitable to follow a certain course of action?

Positive Signup and view all the answers

How do embargoes negatively affect a domestic market?

By depriving domestic producers of needed goods, restricting their ability to trade Signup and view all the answers

What is the best description of how standards help domestic producers?

Standards require goods to meet basic requirements Signup and view all the answers

Study Notes

Trade Barriers Overview

Trade barriers are measures countries use to control the amount of trade across their borders, influencing the domestic market.

Key Definitions

Embargo: A prohibition on trade with a specific country, often enacted for political reasons.
Implement: To execute a specific action or policy in trade or economics.
Quota: A limit set on the quantity of a certain good that can be imported, aiming to protect domestic production.
Standard: Regulations established by authorities to ensure quality and safety in products entering the market.
Subsidy: Financial assistance provided by the government to support businesses, making local goods more competitive against imports.
Tariff: A financial charge imposed on imported goods to increase their price, dissuading consumers from purchasing foreign products.

Types of Trade Barriers

Political Trade Barriers: Embargoes are explicitly used for political purposes, affecting trade relations.
Financial Incentives: Tariffs and subsidies both serve as economic tools to disadvantage imports and protect local industries.

Impact on Trade

Cuba: The U.S. has maintained an embargo against Cuba since 1960, severely limiting trade opportunities.
Limitations: Quotas and embargoes both restrict the flow of imported goods, impacting availability and prices in the domestic markets.

Domestic Market Effects

Purpose of Quotas: Designed to limit the volume of specific goods entering a country, protecting local businesses.
Negative Effects of Embargoes: Can harm domestic markets by depriving local producers of essential supplies and ingredients necessary for manufacturing.
Standards for Producers: Required compliance with set standards helps ensure that goods meet minimum quality, assisting domestic producers in competing effectively.

Economic Incentives

Types of Incentives: Incentives can be classified as ‘positive’ when they encourage desired actions, or ‘negative’ when they dissuade certain behaviors.
Role of Financial Incentives: Serve as trade barriers by influencing producer and consumer behavior towards domestic goods over imports.

Summary

Understanding trade barriers, including embargoes, tariffs, quotas, and subsidies, is crucial for analyzing global trade dynamics and their effects on local economies and industries.

Description

Test your knowledge of trade barriers with these flashcards. Each card presents a key term related to trade, complete with definitions to enrich your understanding. Perfect for students learning about international trade regulations.