Trade Policies and Tariffs in Latin America

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Questions and Answers

What is one of the main reasons for imposing high tariffs on imports?

To increase government spending

To promote foreign investments

To increase exports

To reduce imports of luxury products (correct)

Specific tariffs vary depending on the value of the imported goods.

False

What are the two main groups that gain when a small country imposes a tariff?

Domestic producers and government

The mercantilistic argument for tariffs is known as the ______ argument.

Keep money at home Signup and view all the answers

Match the following terms related to tariffs with their definitions:

Specific Tariff = A fixed amount charged per unit of goods Import Tariff = Tax applied to foreign goods Terms-of-trade argument = Valid for large countries affecting foreign prices Mercantilism = Economic theory emphasizing government regulation Signup and view all the answers

Which statement is true regarding the terms-of-trade argument for tariffs?

It is valid only for large countries Signup and view all the answers

Tariff revenues contribute significantly to the government budget.

False Signup and view all the answers

Name one effect of imposing import tariffs.

Increased prices for consumers Signup and view all the answers

When a country introduces tariffs, ______________________ will lose.

domestic consumers Signup and view all the answers

Identify a key difference between the 'small country' and 'large country' models regarding tariffs.

Large countries can influence international prices, while small countries cannot. Signup and view all the answers

What is the primary goal of a passive foreign trade policy?

To allow free market forces to determine trade flows without government intervention Signup and view all the answers

A protective tariff serves to generate significant government income.

False Signup and view all the answers

What type of tariff can BiH introduce if foreign exporters sell products at lower prices in their own market compared to BiH's market?

Antidumping tariff Signup and view all the answers

The type of tariff imposed to block imports completely is called a ______.

prohibitive tariff Signup and view all the answers

What was the purpose of high tariff rates on car imports in many Latin American countries during the 1970s?

To protect non-existent domestic industries Signup and view all the answers

BiH can introduce a specific tariff to protect its domestic production from foreign competition.

False Signup and view all the answers

What situation might lead BiH to impose a prohibitive tariff?

When there is a need to reduce imports of luxury products due to a shortage of foreign currencies. Signup and view all the answers

Match the type of tariff to its purpose:

Protective tariff = To shield domestic industries Revenue tariff = To generate government income Antidumping tariff = To counter unfair pricing by exporters Prohibitive tariff = To completely block certain imports Signup and view all the answers

Study Notes

Passive Foreign Trade Policy

Aims to regulate trade without government intervention, letting market forces determine trade flows.

Protective Tariffs in Latin America (1970s)

High tariffs on imported cars despite no domestic car industry.
Intended to protect nonexistent domestic industries and encourage import substitution.

Antidumping Tariffs (BiH)

Implemented when exporters sell products cheaper abroad than domestically.
Used as a countermeasure against large import volumes affecting domestic production..

Prohibitive Tariffs (BiH)

Used when a country lacks foreign currency to pay for imports.
Implemented to curb imports of luxury goods.

Specific Import Tariffs

A fixed amount per unit irrespective of the value of the imported goods.

Effects of Import Tariffs

Increased prices for consumers.
Increased government revenue .
Protected domestic producers.
Reduced overall trade volume

Small Country vs. Large Country Tariffs

Small countries cannot significantly affect foreign prices.
Large countries can influence foreign prices

Mercantilist Argument for Tariffs

Focuses on accumulating domestic wealth by limiting imports.

Terms-of-Trade Argument for Tariffs

Only valid for large countries able to affect foreign prices.

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Description

This quiz explores various tariff policies, including protective and antidumping tariffs, and their impacts on trade in Latin America and Bosnia and Herzegovina. Understand the influence of market forces and government interventions in shaping trade dynamics.