A trade policy of protectionism is one in which
A)tariffs are established to restrict imports.
B)profits from one subsidiary of an MNC are used to subsidize sales by another subsidiary.
C)nontariff barriers are used to restrict imports.
D)Both options a and c are true.
E)All of the above are true.

Question

Quizplus · Accepted Answer

Protectionism is a trade policy that aims to protect domestic industries from foreign competition. Tariffs and nontariff barriers are two common tools used in protectionism. Tariffs are taxes on imported goods, making them more expensive and less competitive with domestic products. Nontariff barriers include quotas, regulations, and other restrictions that limit the importation of foreign goods. Therefore, both options A and C are true. Option B describes a different strategy known as transfer pricing, where profits are shifted between subsidiaries to reduce taxes, which is not directly related to protectionism.

A Trade Policy of Protectionism Is One in Which