When a Developing Country Relies on Import Substitution

question 83

Multiple Choice

When a developing country relies on import substitution,

• A)it sacrifices the gains from specialization and comparative advantage
• B)replaces low-cost foreign goods with high-cost domestic goods
• C)domestic producers, shielded from foreign competition, usually fail to become efficient
• D)other countries often retaliate with their own trade restrictions
• E)All of the answers are correct

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Definitions:

Federal Unemployment Insurance

A government-provided insurance scheme that offers payments to eligible unemployed workers.

State Unemployment Insurance

A government-mandated program that provides temporary financial assistance to workers who have lost their jobs through no fault of their own.

Employer Payroll Tax

Taxes that employers are required to pay on behalf of their employees, including Social Security, Medicare, and unemployment taxes.

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FICA Taxes are payroll taxes collected to fund the Social Security and Medicare programs, split between the employer and the employee.