ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Cause an appreciation of the domestic currency
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Cause a decrease in the volume of trade
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Reduce trade deficit
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Reduce taxes
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Detailed explanation-1: -Lower imports: Protectionist policies help reduce import levels and allow the country to increase its trade balance.
Detailed explanation-2: -Protectionism decreases the competition (international) in the country as it decreases the imported goods, which pose competition to the locally produced goods.
Detailed explanation-3: -Companies without competition decline in quality: In the long term, trade protectionism weakens industry. Without competition, companies do not need to innovate. Eventually, the domestic product will decline in quality and be more expensive than that produced by foreign competitors.
Detailed explanation-4: -Protectionist policies can also help to create jobs in the domestic economy. By making it more difficult for businesses to import goods, these policies can encourage businesses to produce these goods domestically. This can lead to an increase in employment as businesses expand their operations.