One of the Drawbacks of Implementing an Import-Substitution Policy Is

question 49

Multiple Choice

One of the drawbacks of implementing an import-substitution policy is that:

• A)it makes other countries impose trade restrictions as a retaliatory measure.
• B)it makes the economy vulnerable to global economic fluctuations.
• C)it leads to brain drain,by which educated and knowledgeable resources are lost.
• D)it increases the dependence on foreign capital goods for economic growth.
• E)it increases the budget deficit of the domestic country.

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Definitions:

TFC

Total Fixed Costs, which are expenses that do not change regardless of the level of production or business activity.

Marginal Cost

Marginal cost is the change in total production cost that arises when the quantity produced is incremented by one unit.

Variable Inputs

Inputs in production that can be adjusted based on the production volume, including labor hours and raw materials, distinguishing them from inputs that remain constant.

Labor

The effort involving both bodily and intellectual activities applied in generating goods and services.