Answer to Question #236758 in Macroeconomics for Walls

Question

Argue how free trade rather than protectionism can favour countries ? 8 marks

Answer 1

Free trade has no restrictions to imports or exports which is favourable for consumers. It reduces prices by eliminating tariffs,quotas,subsidies and increasing competition. This will make goods and services cheaper. In contrast, protectionist policies shield the producers, businesses, and workers of the import-competing sector in the country from foreign competitors, this reduce trade and adversely affect consumers in general and harm the producers and workers in export sectors, both in the country implementing protectionist policies and in the countries protected against.