Lesson 2: How to Encourage Industry? 

Please read Chapters 5-8 in Protection or Free Trade

1. Name two ways in which trade between nations stimulates production.

2. Is the exchange of goods a part of their production? Explain.   (Chp. 5) 

3. How does the “middleman” enable us to have greater economy in the production of wealth?   (Chp. 5) 

4. How does Henry George characterize the difference between producers and non-producers?   (Chp. 5) 

5. According to George's definitions, which of the following are actually producers?

a. stockbrokers, teachers, lawyers.
b. farmers, miners, construction workers.
c. advertisers, celebrity spokespersons, market researchers.
d. All of the above.
e. a and b, but not c.

6. What was the original purpose of tariffs?   (Chp. 6) 

7. What are the advantages and disadvantages of indirect taxation?   (Chp. 6) 

8. On what class of people does indirect taxation bear most heavily?   (Chp. 6) 

9. How does indirect taxation affect small business?   (Chp. 6) 

10. How do the advocates of protection claim that tariffs will encourage home industry?   (Chp. 7) 

11. It is beneficial to subsidize new industries because

a. it will preserve the nation's comparative advantage.
b. it will create jobs.
c. other nations do so.
d. All of the above.
e. None of the above.

12. What is the difference between a protective tariff and a bounty system?   (Chp. 7) 

13. Why would a bounty, or subsidy, be the best method of providing public encouragement to a particular industry?   (Chp. 8) 

14. What two positions must be examined in answering the question of whether protection encourages industry”   (Chp. 8)