International TradeMTP - Dec 2023 (Inter)Question 172 of 20
All Questions

Protectionism aims to protect:

Options

AForeign Industries
BDomestic Industries
CConsumers
DImporters
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Correct Answer

✅ Option b — Domestic Industries

All Options:

  • AForeign Industries
  • BDomestic Industries
  • CConsumers
  • DImporters

Detailed Solution & Explanation

To understand the concept of protectionism, let's break it down into steps: • Protectionism is an economic policy that restricts international trade to protect a country's domestic industries. • The main goal of protectionism is to safeguard domestic industries from foreign competition by imposing tariffs, quotas, or other trade barriers. • By doing so, protectionism aims to promote domestic production, create jobs, and increase economic growth within the country. The correct answer is right because protectionism is designed to shield domestic industries from foreign competition, allowing them to grow and develop without being overwhelmed by foreign products. On the other hand, options like foreign industries and importers are incorrect because protectionism actually works against their interests by limiting their access to the domestic market, while consumers may also be negatively affected due to higher prices and reduced choices.

About This Chapter: International Trade

Paper

Paper 4: Business Economics

Weightage

10%

Key Topics

Theories, Trade Policy, Exchange Rates

This chapter explores trade between nations — why countries trade, the theories of Absolute and Comparative Advantage, Balance of Payments, Exchange Rate systems (Fixed vs Flexible), and India's trade policy including tariffs, quotas, and WTO rules.

View Official ICAI Syllabus

Exam Strategy Tip

Understand Comparative Advantage theory thoroughly — it's the foundation of international trade. Also focus on the Balance of Payments structure and what causes deficits.

More Questions from International Trade

Exchange rate determined by market forces is called:

Tariffs generally:

Balance of Trade refers to:

WTO was established in:

Devaluation of currency encourages:

Comparative Cost Advantage theory was given by:

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