ECO100Y5 Chapter Notes - Chapter 34: Asteroid Family, Trade Diversion, Trade Creation
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ECO100Y5 Full Course Notes
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34. 1 free trade or protection: tariff- a tax applied on imports of goods/services, non tariff barriers (ntbs)- restrictions other than tariffs designed to reduce imports (import quotas, customers procedures, etc) The case for free trade: free trade encourages countries to specialize in producing products in which they have comparative advantage maximizes world production maximizes average world living standards. The case for protection: protection- any government policy that interferes with free trade in order to protect domestic firms and workers from foreign competition, arguments for protection: Promoting diversification: decrease a country"s national income, for a small country, specializing in production of only a few products has. Technological advances may render its basic product obsolete. Invalid arguments for protection: arguments frequently heard in political debates concerning international trade: Canada: canadian money can buy canadian products and assets that others want. Create domestic jobs: if protectionist policies reduce imports, there will be more employment in.