How might a country try to protect its domestic industries from international competition?

What is the effect of tariffs and other restrictions on the gains from trade? Are they in the social interest?

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Part 1

To protect domestic industries from international competition, a country might _______.

A.

encourage consumers to buy fewer goods and encourage producers to export more goods

B.

impose tariffs or import quotas and cut its exports

C.

impose higher income taxes, import quotas, and export taxes

D.

impose tariffs or import quotas and subsidize exports

Part 2

Tariffs and other restrictions on free international trade _______ the gains from trade and _______ in the social interest.

A.

decrease; are

B.

increase; are

C.

increase; are not

D.

decrease; are not