Author Question: What are the different types of trade barriers? What are the arguments for trade barriers? What are ... (Read 142 times)

jilianpiloj · **on:** Jun 30, 2018

What are the different types of trade barriers? What are the arguments for trade barriers? What are the consequences of trade barriers?

Question 2

Which one of the following are the components of aggregate expenditures?
a. Household consumption, business investment, government spending for goods and services, and net exports.
b. Household consumption, business investment, government transfer payments, and net exports.
c. Household consumption, business investment, government spending for goods and services, and exports.
d. Household consumption, business investment, government spending for goods and services, and saving.
e. Household consumption, business inventories, government spending for goods and services, and net exports.

sierrahalpin · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Trade barriers include the use of embargoes, tariffs, quotas, and administrative barriers to limit the supply of foreign products in the domestic economy. Arguments for trade barriers include the infant industry, national security, employment, and cheap foreign labor arguments.

Trade barriers reduce the supply of foreign products, which increases their prices. This makes the domestically produced substitute more price-competitive, which increases the demand for the domestically produced product. As a result, the domestically produced product's price increases and its sales increase. Notice that the results of trade barriers are higher priced products (both foreign and domestically produced) consumers must pay.

Answer to Question 2

a