What is the primary objective of import substitution?
a) To reduce reliance on foreign goods by promoting local industries
b) To increase the volume of imports
c) To reduce the domestic production of goods
d) To encourage the purchase of foreign goods
Which of the following is a key feature of export promotion strategies?
a) Encouraging imports to stimulate domestic markets
b) Reducing tariffs on foreign goods
c) Providing incentives to domestic industries to increase exports
d) Limiting the production of goods for export markets
What is one of the risks of import substitution?
a) Encouraging excessive reliance on foreign goods
b) Reducing the competitiveness of domestic industries
c) Increasing the export of domestic products
d) Boosting foreign investment in the economy
Which policy is typically associated with export promotion?
a) Protectionism and tariffs on imports
b) Subsidizing domestic industries to increase exports
c) Limiting foreign exchange reserves
d) Reducing local production to increase imports
Which of the following is a potential benefit of import substitution?
a) It increases the number of goods imported
b) It encourages the growth of local industries and job creation
c) It reduces government control over industries
d) It leads to a higher dependence on foreign countries
What is a common goal of both import substitution and export promotion?
a) To reduce the government’s role in economic planning
b) To achieve self-sufficiency in all sectors of the economy
c) To increase the level of international trade
d) To increase the competitiveness of domestic industries
Which of the following best describes a strategy for export promotion?
a) Reducing tariffs and trade barriers
b) Taxing exports to limit overseas sales
c) Supporting industries through import quotas
d) Encouraging foreign exchange restrictions
What is a key challenge of import substitution in developing economies?
a) Over-reliance on foreign markets
b) The risk of creating inefficient industries that cannot compete globally
c) The reduction of government subsidies to local industries
d) Rapid increase in foreign capital investment
What is the main disadvantage of heavily relying on import substitution?
a) It leads to an oversupply of goods in the domestic market
b) It can result in higher production costs and limited variety for consumers
c) It encourages the growth of international trade
d) It decreases reliance on local resources
How can export promotion affect a country’s foreign exchange reserves?
a) It can lead to a decrease in foreign exchange reserves by increasing imports
b) It helps increase foreign exchange reserves by generating revenue from exports
c) It has no effect on foreign exchange reserves
d) It reduces the demand for foreign currencies
What is one potential negative effect of export promotion strategies?
a) Excessive dependence on foreign markets for economic stability
b) It encourages overproduction of goods for export
c) It reduces the amount of local goods for domestic consumption
d) It leads to inflation in the domestic market
Which of the following is an example of an export promotion measure?
a) Establishing free trade agreements with other countries
b) Implementing heavy tariffs on imported goods
c) Encouraging industries to limit production
d) Reducing subsidies for domestic industries
What is one argument in favor of import substitution in developing countries?
a) It promotes a high level of dependence on global supply chains
b) It encourages domestic industries and reduces unemployment
c) It leads to lower prices for imported goods
d) It makes it easier for foreign industries to dominate the market
How do export subsidies typically work in promoting exports?
a) By imposing higher taxes on export goods
b) By providing financial assistance or tax breaks to export-oriented businesses
c) By imposing strict regulations on export goods
d) By reducing government control over the export sector
Which of the following is an example of a protectionist policy that hinders import substitution?
a) Imposing tariffs or quotas on imported goods
b) Providing subsidies to domestic industries
c) Reducing export taxes
d) Promoting free trade agreements
How does import substitution aim to achieve economic growth?
a) By increasing the reliance on foreign companies to meet domestic demand
b) By promoting the domestic production of goods that were previously imported
c) By decreasing tariffs to allow more imports into the country
d) By encouraging foreign exchange for export activities
Which of the following is a key benefit of export diversification?
a) It reduces the dependency on a single market for exports
b) It increases the reliance on local consumption
c) It lowers the value of currency in international markets
d) It leads to the collapse of smaller export industries
What is a disadvantage of import substitution for consumers?
a) It decreases the variety of goods available in the market
b) It leads to increased imports of luxury goods
c) It encourages the production of lower-quality goods
d) It promotes the growth of the global economy
How can export promotion lead to economic growth?
a) By increasing government control over industries
b) By increasing the demand for domestic products in global markets
c) By limiting the availability of foreign products
d) By reducing the reliance on local consumers
What is a common effect of protectionist measures in import substitution?
a) Increased efficiency in domestic industries
b) Lower consumer prices due to competition
c) Higher prices and less variety in the domestic market
d) Increased foreign investment in the economy
Which economic theory supports export-led growth?
a) Keynesian economics
b) Classical economics
c) Modernization theory
d) Dependency theory
What is one criticism of import substitution industrialization (ISI) in the long run?
a) It creates sustainable, competitive industries
b) It leads to inefficiency and lack of competition in local markets
c) It encourages high-quality goods production for export
d) It increases the global competitiveness of the domestic economy
How does export promotion benefit developing countries?
a) By creating more reliance on foreign markets for domestic income
b) By increasing the risk of market volatility due to dependence on exports
c) By diversifying the economy and improving foreign exchange earnings
d) By discouraging the development of local industries
What does a country need to do to successfully implement import substitution?
a) Limit production to only luxury goods
b) Ensure the government monopolizes all industries
c) Develop industries capable of producing goods that replace imports
d) Rely exclusively on foreign technology for industrialization
What is the relationship between export promotion and job creation?
a) Export promotion can create jobs by expanding domestic industries to meet international demand
b) Export promotion has no impact on domestic job creation
c) Export promotion leads to a reduction in local jobs due to automation
d) Export promotion decreases the number of industries available for job creation
Which of the following is the primary aim of import substitution policies in many developing nations?
a) To reduce exports
b) To eliminate domestic competition
c) To develop local industries and reduce dependency on imports
d) To promote foreign direct investment
How do export taxes influence export promotion?
a) They encourage higher exports by reducing prices on goods
b) They discourage exports by increasing the cost of goods for foreign buyers
c) They encourage competition within the domestic market
d) They promote import substitution by limiting access to foreign markets
