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CAIE IGCSE Economics 6.2.4 Types of trade restrictions / methods of protection

Identify whether protection taxes imports, limits their quantity, supports domestic costs or bans trade, then trace the immediate effect on foreign and home-country supply.

Syllabus
2027–2029
Course
Economics 0455

Exam points

  • Define a tariff as a tax on imported goods that raises their domestic price.
  • Define an import quota as a quantitative limit and an embargo as a ban on trade.
  • Explain how a subsidy lowers domestic producers' costs against foreign competition.

6.2.4—Types of trade restrictions / methods of protection question 1

[Maximum number: 2]

While 15% of US exports go to Mexico, 80% of Mexico's exports go to the US. In 2019, the US government imposed some methods of protection to reduce imports from Mexico. This US action caused a fall in Mexico's foreign exchange rate. Despite a rise in its inflation rate, Mexico's central bank reduced the rate of interest from 7.75\% at the end of 2019 to 6.5\% in March 2020.

Identify two methods of protection.

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