Choose an argument in favor of protectionism. Are there any weaknesses in this argument? Be specific.
do some research, then take a shot. what are some arguments in favor of protectionism?
I have got the first 4 I think but can't figure out the last 2
For each of the following situations, indicate the direction of the shift in the supply curve or the demand curve for dollars, the factor causing the change, and the resulting movement of the equilibrium exchange rate for the dollar in terms of foreign currency:
a. American-made cars become more popular overseas.
A rightward shift in the demand for dollars curve would occur caused by an increase in demand for American made automobiles. The equilibrium exchange rate for dollars would increase.
b. The United States experiences a recession, while other nations enjoy economic growth.
A leftward shift in the demand for dollars curve would occur caused by a lack of interest in US exports. This shift would cause a decrease in the equilibrium exchange rate for dollars.
c. Inflation rates accelerate in the United States, while inflation rates remain constant in other nations.
A rightward shift in the supply of dollars curve would occur because American exports cost more. The equilibrium would also decrease.
d. Real interest rates in the United States rise, while real interest rates abroad remain constant.
A rightward shift in the demand for dollars curve would occur because there would be an increased foreign purchase of American stocks and bonds. The equilibrium exchange rate for dollars would increase. Supply cure for dollars shifts leftward because Americans are investing more in American securities. This also causes the equilibrium exchange rate to increase.
e. The Japanese put quotas and high tariffs on all imports from the United States.
f. Tourism from the United States increases sharply because of a fare war between airlines.
To answer the question about arguments in favor of protectionism, one common argument is the protection of domestic industries and jobs. Proponents of protectionism argue that by imposing tariffs and other trade barriers, they can protect domestic industries from foreign competition, ensuring that jobs and economic benefits remain within the country.
Another argument in favor of protectionism is the protection of national security. Supporters of protectionism assert that relying too heavily on foreign imports can make a country vulnerable to disruptions in the global supply chain. By protecting key industries through trade barriers, they believe that a country can maintain its self-reliance and safeguard national security interests.
A third argument is the promotion of infant industries. Protectionism can be seen as a way to nurture and protect new industries that are not yet competitive on a global scale. By shielding these industries from international competition, they have time to develop and grow, eventually becoming strong enough to compete globally.
Weaknesses of protectionism include potential retaliation from other countries. When a country imposes trade barriers, other countries may respond with their own restrictions, leading to a trade war that can harm all participating nations. This can result in reduced access to foreign markets and increased costs for domestic consumers.
Another weakness is the inefficiency and decreased competitiveness of protected industries. By shielding domestic industries from competition, there may be less incentive for these industries to innovate and improve. This can lead to lower productivity, higher prices for consumers, and reduced overall economic growth.
In conclusion, while arguments in favor of protectionism may center around protecting domestic industries, jobs, and national security, there are weaknesses that need to be considered, including the potential for retaliation and the negative impact on efficiency and competitiveness.
e. The Japanese put quotas and high tariffs on all imports from the United States.
In this situation, the supply curve for dollars would shift leftward. The factor causing this change is the imposition of quotas and high tariffs by Japan on imports from the United States. This shift in the supply curve would result in a decrease in the equilibrium exchange rate for the dollar in terms of foreign currency.
Arguments in favor of protectionism include:
1. Protecting Domestic Industries: Protectionism can help protect domestic industries from foreign competition. This argument suggests that by imposing tariffs and quotas, a country can protect its industries from being undercut by cheaper imports and thus help ensure the survival and growth of domestic industries.
2. National Security: Some argue that protectionism is necessary to protect national security. By reducing dependence on foreign countries for critical industries and products, protectionism can help safeguard a nation's security interests in times of geopolitical uncertainty.
3. Job Retention: Protectionist measures are often believed to help retain jobs in domestic industries. By limiting imports, protectionism can create a more favorable environment for domestic industries, leading to increased employment opportunities for domestic workers.
4. Infant Industry Protection: Advocates of protectionism argue that it can offer protection to nascent or infant industries until they become competitive on a global scale. By shielding new industries from foreign competition, governments can help them grow and develop, ultimately making the country more competitive in the long run.
Weaknesses in the argument for protectionism include:
1. Inefficiency and Higher Costs: Protectionism can lead to inefficient allocation of resources and higher costs for consumers. By limiting competition, protected industries may have less incentive to innovate, reduce costs, or improve quality, leading to higher prices for consumers.
2. Retaliation and Trade Wars: Adopting protectionist measures can trigger retaliation from foreign countries. This retaliation can manifest in the form of tariffs and restrictions on the country's exports, leading to a negative impact on overall trade and potentially escalating into a trade war.
3. Reduced Market Access: Protectionism restricts market access for domestic producers, limiting their ability to benefit from global markets. This can reduce opportunities for export growth and hinder the diversification and expansion of domestic industries.
4. Inefficient Allocation of Resources: Protectionism can impede the efficient allocation of resources within an economy. It can artificially sustain uncompetitive industries that may not be economically viable in the long term, resulting in misallocation of resources and potentially hindering overall economic growth.
5. Loss of Comparative Advantage: By protecting certain industries, a country may miss out on opportunities to specialize in areas where it has a comparative advantage. This can hinder the overall competitiveness of the country's economy and limit its ability to benefit from global trade.
6. Inflationary Pressure: Protectionism can lead to higher prices for imported goods, which can contribute to inflationary pressures within the domestic economy. This can erode the purchasing power of consumers and reduce their overall standard of living.