Which of the following is true of import substitution?
A) The government encourages domestic producers to make products that can compete in the international market.
B) The government takes steps to liberate imports and lift restrictions.
C) The government takes steps to promote exports and subsidizes export-oriented production.
D) The government insulates domestic producers by imposing strict tariffs and quotas.
E) The government focuses on service-oriented imports rather than primary imports.

Question

Quizplus · Accepted Answer

Import substitution is a policy where the government attempts to promote domestic production by restricting imports. This is done by imposing strict tariffs and quotas on imports, with the aim of insulating domestic producers from international competition. Therefore, option D, which specifies that the government insulates domestic producers by imposing strict tariffs and quotas, is the true statement about import substitution. The other options promote either international trade or export-oriented production, which is not the intention of import substitution policy.

Which of the Following Is True of Import Substitution