Import substitution:
A) protects domestic industries until they are efficient enough to compete in the world market.
B) incentivizes consumers to substitute imported goods for domestic goods.
C) encourages domestic industries to ship exports to other countries.
D) mandates that imports can only be sold if the domestic economy does not produce that good.

Question

Quizplus · Accepted Answer

Import substitution is a trade and economic policy aimed at promoting domestic production by restricting imports and encouraging domestic industries to develop. This protection allows domestic industries time to become efficient enough to compete in the world market without being undercut by foreign companies. Therefore, option A is the correct choice. Option B is incorrect because import substitution is not about incentivizing consumers to substitute imported goods for domestic goods but rather about promoting domestic goods over imports. Option C is incorrect as export promotion is a separate policy aimed at encouraging exports, while import substitution focuses on promoting domestic production. Option D is also incorrect because it does not accurately reflect the goals of import substitution.

Import Substitution