Question:
Which two of the following arguments are most likely to be used to justify protectionism? A – To protect high cost domestic industries, B – To protect strategically important industries, C – To protect infant industries, D – To protect environmental standards, E – To maximize government tax revenue.
(1) A and D
(2) B and C
(3) B and D
(4) C and D
(5) D and E
Correct Answer:
(2)
Answer Explanation:
The “Infant Industry” argument (protecting new, uncompetitive industries until they achieve economies of scale) and the “Strategic/National Security” argument (protecting industries vital to national survival, like defense or agriculture) are the two most economically recognized and widely used justifications for implementing trade protectionism.
Topic: International Trade Year: 2020
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