International TradePYQ - Nov 2022 (Inter)Question 179 of 20
All Questions

Infant Industry Argument supports:

Options

AFree Trade
BProtection
CGlobalization
DLiberalization
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Correct Answer

✅ Option b — Protection

All Options:

  • AFree Trade
  • BProtection
  • CGlobalization
  • DLiberalization

Detailed Solution & Explanation

To understand the Infant Industry Argument, we need to break it down into steps: • The Infant Industry Argument is an economic concept that suggests new or developing industries in a country may need protection from foreign competition to grow and become competitive. • This argument is based on the idea that these industries are in their early stages and may not be able to compete with established foreign firms due to factors like lack of experience, high costs, and limited resources. • The protection provided to these industries can be in the form of tariffs, subsidies, or other government support, which helps them to develop and become self-sufficient over time. The correct answer supports protection because it allows infant industries to develop without being overwhelmed by foreign competition. On the other hand, free trade and liberalization would expose these industries to competition before they are ready, potentially leading to their failure. Globalization is a broader concept that refers to the increasing integration of the world economy, and while it can bring many benefits, it does not directly address the needs of infant industries.

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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