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Consider the following statements regarding the import substitution policy.
1. This policy aimed at replacing or substituting imports with domestic production.
2. In this policy the government protected the domestic industries from foreign competition
3. Tariffs helped the government specify the quantity of goods which can be imported
Which of the statements is/are correct?
- a)1 and 2 Only
- b)2 and 3 Only
- c)1 and 3 Only
- d)All of them
Correct answer is option 'A'. Can you explain this answer?
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Consider the following statements regarding the import substitution p...
- The industrial policy that we adopted was closely related to the trade policy. In the first seven plans, trade was characterised by what is commonly called an inward looking trade strategy.
- Technically, this strategy is called import substitution. This policy aimed at replacing or substituting imports with domestic production.
- For example, instead of importing vehicles made in a foreign country, industries would be encouraged to produce them in India itself. In this policy the government protected the domestic industries from foreign competition. Protection from imports took two forms: tariffs and quotas.
- Tariffs are a tax on imported goods; they make imported goods more expensive and discourage their use. Quotas specify the quantity of goods which can be imported.
- The effect of tariffs and quotas is that they restrict imports and, therefore, protect the domestic firms from foreign competition.
Most Upvoted Answer
Consider the following statements regarding the import substitution p...
Import Substitution Policy
The import substitution policy is an economic strategy adopted by some countries to reduce their dependence on imported goods and promote domestic production. This policy involves replacing or substituting imported goods with domestically produced goods. The aim is to develop domestic industries, create employment opportunities, and reduce the outflow of foreign exchange.
Statement 1: This policy aimed at replacing or substituting imports with domestic production.
This statement is correct. The import substitution policy aims to replace imported goods with domestically produced goods. By encouraging the production of goods domestically, countries can reduce their reliance on imports and promote self-sufficiency. This helps in developing local industries, creating jobs, and boosting the economy.
Statement 2: In this policy, the government protected the domestic industries from foreign competition.
This statement is also correct. In order to promote domestic industries and shield them from foreign competition, the government implements various measures. These measures include imposing tariffs, quotas, and other trade barriers on imported goods. By limiting foreign competition, the government aims to create a favorable environment for domestic industries to grow and flourish.
Statement 3: Tariffs helped the government specify the quantity of goods which can be imported.
This statement is incorrect. While tariffs are indeed a tool used in import substitution policies to discourage imports, they do not necessarily help the government specify the quantity of goods that can be imported. Tariffs are typically imposed on imported goods to make them more expensive and less competitive compared to domestically produced goods. However, the quantity of imported goods is usually regulated through quotas or other trade restrictions rather than tariffs.
Therefore, the correct answer is option 'A' - 1 and 2 Only. The import substitution policy aims to replace imports with domestic production and the government protects domestic industries from foreign competition. However, the statement about tariffs helping the government specify the quantity of imported goods is incorrect.
The import substitution policy is an economic strategy adopted by some countries to reduce their dependence on imported goods and promote domestic production. This policy involves replacing or substituting imported goods with domestically produced goods. The aim is to develop domestic industries, create employment opportunities, and reduce the outflow of foreign exchange.
Statement 1: This policy aimed at replacing or substituting imports with domestic production.
This statement is correct. The import substitution policy aims to replace imported goods with domestically produced goods. By encouraging the production of goods domestically, countries can reduce their reliance on imports and promote self-sufficiency. This helps in developing local industries, creating jobs, and boosting the economy.
Statement 2: In this policy, the government protected the domestic industries from foreign competition.
This statement is also correct. In order to promote domestic industries and shield them from foreign competition, the government implements various measures. These measures include imposing tariffs, quotas, and other trade barriers on imported goods. By limiting foreign competition, the government aims to create a favorable environment for domestic industries to grow and flourish.
Statement 3: Tariffs helped the government specify the quantity of goods which can be imported.
This statement is incorrect. While tariffs are indeed a tool used in import substitution policies to discourage imports, they do not necessarily help the government specify the quantity of goods that can be imported. Tariffs are typically imposed on imported goods to make them more expensive and less competitive compared to domestically produced goods. However, the quantity of imported goods is usually regulated through quotas or other trade restrictions rather than tariffs.
Therefore, the correct answer is option 'A' - 1 and 2 Only. The import substitution policy aims to replace imports with domestic production and the government protects domestic industries from foreign competition. However, the statement about tariffs helping the government specify the quantity of imported goods is incorrect.
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Consider the following statements regarding the import substitution policy.1. This policy aimed at replacing or substituting imports with domestic production.2. In this policy the government protected the domestic industries from foreign competition3. Tariffs helped the government specify the quantity of goods which can be importedWhich of the statements is/are correct?a) 1 and 2 Onlyb) 2 and 3 Onlyc) 1 and 3 Onlyd) All of themCorrect answer is option 'A'. Can you explain this answer?
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