Suppose a nation agrees to limit its own exports by imposing quotas on its own firms in order to keep their revenues high, keep from breaking WTO rules, and pacify protectionist interests in the import nation. Which of the following terms describes this practice?
A) lost profit opportunities
B) reverse import restrictions
C) voluntary export restraints
D) deadweight welfare loss

Question

Quizplus · Accepted Answer

This practice is known as voluntary export restraints, where a nation agrees to limit its own exports to please the importing nation by imposing quotas on its own firms. This practice is an exception under the WTO rules, as long as it is a voluntarily taken measure by the exporting nation.

Suppose a Nation Agrees to Limit Its Own Exports by Imposing