Why is retaliation by government intervention a risky strategy?
A) It encourages dumping by foreign companies.
B) A country that is being pressured may respond to the imposition of punitive tariffs by raising trade barriers of its own.
C) It may expose certain industries that are important for national security to foreign competition.
D) It allows firms to sell goods in foreign market at below their fair market value.
E) It makes it difficult for domestic firms are unable to make any investments by borrowing money from the domestic capital market.
Correct Answer:
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