Question

. Based on what we know about the economic impact of tariffs and quotas, which of the garners some conditional support from economists? 1. When concerns over human rights and the environment are used to increase tariffs. 2. When a country becomes convinced that its trading partners are engaging in dumping or currency manipulation. 3. When the value of the dollar fluctuates compared to foreign currency. 4. When a government has decided that it needs to eliminate a balance of trade deficit with another nation. 5. When, with temporary protection, an infant industry could emerge and show long-run comparative advantages over other countries.

Answer 1

When considering the economic impact of tariffs and quotas, economists may conditionally support temporary protection for infant industries that could develop long-run comparative advantages. Protectionism has complex effects on economic welfare, jobs, and prices, leading to debate over its use.

Step-by-step explanation:

Among the scenarios presented, the one that garners some conditional support from economists when considering the economic impact of tariffs and quotas is when, with temporary protection, an infant industry could emerge and show long-run comparative advantages over other countries. This concept aligns with the idea of helping a nascent industry grow until it can compete globally. It is viewed as a legitimate strategic economic development tool that can lead to a strong, competitive industry in the long term. Economic analysis typically finds that protectionism, such as tariffs and quotas, causes both winners and losers, affecting jobs, wages, and working conditions. Consumers often lose due to higher prices, but domestic producers gain from reduced competition. However, the overall economic welfare of the country imposing trade restrictions usually declines, and retaliatory measures by other nations can exacerbate this effect. Hence, such measures are often debated and used cautiously.

Answer 2

Economists may conditionally support tariffs when used to counteract unfair trade practices like dumping or currency manipulation, as these measures can protect domestic industries. They might also endorse temporary protection for infant industries that could later gain a comparative advantage.

Step-by-step explanation:

Among the scenarios provided, economists may offer conditional support for tariffs and quotas when they are strategically employed to counteract unfair trade practices such as dumping or currency manipulation by trading partners. Specifically, option 2 — when a country becomes convinced that its trading partners are engaging in dumping or currency manipulation — can justify the implementation of tariffs or quotas to level the playing field and protect domestic industries from these unfair competitive advantages.

Another instance drawing some support is option 5 — when, with temporary protection, an infant industry could emerge and show long-run comparative advantages over other countries. This protectionist measure aligns with the concept of nurturing domestic industries until they become competitive internationally, at which point safeguards may be removed, potentially leading to net economic benefits.

Protectionism, through tariffs and quotas, raises domestic prices and limits choice for consumers. However, it benefits domestic producers by protecting them from foreign competition and can be retaliatory if other nations engage in unfair trade practices.