UGC NET Economics Q1

Question

Read the passage and answer questions from question.
Trade policy typically reaches the public consciousness, and the media, when some national producers complain that there is distorted trade in the goods they produce. Often. producers are concerned because imported goods cut into their profits or cost them their jobs. Other producers may complain that foreign barriers to their goods keep them out of markets abroad and similarly cut into profits and cost jobs at home. To understand the domestic politics of trade. we need to know the interest in question. the institutions through which these interests are expressed, and how competing interests interact with one another. There are both benefits and costs to trade barriers. Virtually all tools of trade protection-tariffs. quotas, and other restrictions-make imports more expensive. which allows domestic producers to sell more of their products, to raise their prices, or both. When tariffs are imposed on foreign steel imported into the United States. American steelmakers can expand sales at higher prices. As a result, they may be able to increase profits, raise wages, and hire more workers. Quotas. which restrict the quality of foreign goods sold in the national market. ultimately have a similar impact in that the reduction in imports reduces supply, thus raising prices. So trade barriers assist national producers. The most direct cost of protection is to consumers of the protected good. Producers gain and consumers lose from protection. A trade barrier introduces economic inefficiencies. It leads consumers to consume less of those goods that protection has made artificially expensive.

Accepted Answer

2