Question

The government wishes to slow international trade in the country. What kinds of laws and trade policy instruments can it use to do this? Name and explain each one and how they would slow trade

Answer 1

Government tried to reduce the international trade through several policies to encourage the domestic firms to raise their production. The major laws and policies implemented by government are tariffs, quota and subsidies. Quota system imposed the restrictions on specific goods and services on imports to protect the domestic firms to increase their production level. Quotas control the quantity of good imported.
Tariffs are the fees on import goods. This will increase the price level that consumers pay for the good. This will reduce the quantity of goods demanded. This will increase the profit rate of government or developing countries. Subsidies encourage the domestic industries to compete with foreign firms.