Consider the following two statements and select the best answer.
I. The national security argument might be a valid argument for trade protection.
II. Industries with spillover effects should be protected from foreign competition.
A) I and II are both true.
B) I and II are both false.
C) I is likely to be true, and II is likely to be false.
D) I is likely to be false, and II is likely to be true.

Question

Quizplus · Accepted Answer

Statement I suggests that the argument of national security may be valid for trade protection. This statement is likely to be true due to the fact that some industries are essential for national security and their protection from outside competition might be necessary. However, it is important to note that this argument has been misused in the past to justify protectionist policies that were not related to national security.

Statement II suggests that industries with spillover effects should be protected from foreign competition. This statement is likely to be false because the spillover effects may not necessarily be positive. Protectionist policies could shield inefficient industries from competition and lead to inefficiencies in other sectors of the economy. Thus, it is generally not recommended to protect industries with spillover effects from foreign competition.

Consider the Following Two Statements and Select the Best Answer