THE GLOBAL ECONOMY
Protectionism
Topic 13, Seminar 1
Online lecture review
Are there any questions that you’d like to ask about the content in last week’s video
lectures?
Lecture task
At the end of last week’s lecture, you were asked to consider the question below, so
please complete the following: Come to class ready to draw the tariff diagram (you
will have to do this as the first activity in your seminar). Be ready to explain what
you have drawn to your seminar leader. See if you can explain to your seminar
leader who gains, and who loses when a tariff is imposed.
Seminar questions
1. Support for protectionism increases during economic booms
a. True
b. False
2. An embargo occurs when one nation volunteers to restrict its exports of a product.
a. True
b. False
3. What is the main goal of trade protectionism?
a. To promote free trade
b. To protect domestic industries from foreign competition
c. To increase imports
d. To reduce government revenue
4. Which of the following is NOT a form of trade protectionism?
a. Tariffs
b. Import quotas
c. Subsidies
d. Free trade agreements
Questions 5 - 8
The diagram below shows the domestic Demand and Supply curve for a good.
5. What is the equilibrium price and quantity demanded and supplied domestically?
P
Supply
50
40
S with tariff
30
S World
20
10
Demand
50
60
70
80
90
100 Q
QQ Q
6. The country starts to trade internationally. The international price for the product is
shown as 20. The country can import any amount at this price. What is:
The new level of demand? 75
The new level of domestic supply?
The quantity imported?
7. The government is worried about the loss of jobs in the domestic industry, so it imposes
a tariff of 20 per unit. By how much will:
Domestic demand fall?
Domestic supply rise?
Imports fall?
8. What would happen if the government imposed a tariff of 40 per unit?
9. What is a tariff?
a. A tax on exported goods
b. A tax on imported goods
c. A limit on the quantity of imports
d. A government subsidy for domestic producers
10. Which of the following is a potential disadvantage of protectionist policies?
a. Increased consumer choice
b. Lower prices for consumers
c. Reduced competition for domestic firms
d. Improved global economic efficiency
Extension task
“Free traders win the arguments, but protectionists win the elections.” Discuss this
statement – do you agree?
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