Question

Why do nations often impose trade barriers that make it difficult for their own citizens to trade with people in another country?
a. Trade restrictions are a good way for a country to increase the income levels of its citizens.
b. Trade restrictions improve the efficiency of resource use.
c. Trade restrictions provide gains to domestic residents at the expense of foreigners.
d. Trade restrictions often provide benefits to highly visible special interest groups while imposing a less visible cost on the general populace.

Answer 1

Answer:

The correct answer is d. Trade restrictions often provide benefits to highly visible special interest groups while imposing a less visible cost on the general populace.

Explanation:

A trade restriction is an artificial restriction to the exchange of goods and / or services between two countries. It is the byproduct of protectionism. However, the term is controversial because what a party can see as a trade restriction can be seen as a way to protect consumers from inferior, harmful or dangerous products. For example, Germany demanded that beer production adhere to its purity law. The law, originally implemented in Bavaria in 1516 and eventually converted into a law for the newly unified Germany in 1871, meant that many foreign beers could not be sold in Germany as "beer." This law was annulled in 1987 by the Court of Justice of the European Union, but remains voluntarily followed by many German breweries.