A problem associated with import substitution as an industrial policy is:
A. it often stays in place long after it was expected to lapse.
B. it removes the incentive for industries to be efficient.
C. industries are often chosen for political, not economic, reasons.
D. All of these are problems associated with import substitution policy.
Answer: D
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By law, banks are required to
A) hold 100 percent of customer deposits as reserves. B) hold a fraction of demand deposits as reserves. C) hold a fraction of their reserves at the Federal Reserve bank. D) lend out no more than the amount of their required reserves.
From a firm's viewpoint, opportunity cost is the
A) best alternative use customers can find for the firm's output. B) cost the firm must pay for the factors of production it employs to attract them from their best alternative use. C) accounting cost of resources. D) price a firm can charge for its output. E) cost of acquiring the opportunity to sell to its customers.