Question

According to our text, when countries restrict free trade through tariffs, quotas, or other forms of protectionism, it generally leads to:

increased domestic employment.

a decrease in productivity and a lower standard of living.

an improved balance of payments.

less short-term employment in the protected industry.

Answer 1

Answer: C. An improved Balance of Payment Situation. Explanation: a. Incorrect, Because restriction of free trade or trade protectionism leads to preservation and protection of domestic industry, without any external factor like increase in demand, government or private action the employment levels will remain stable b. due to protection of internal industries this option is least likely. Because if without any external influence growth is less likely so is contraction c. as import are more likely to fall due to restrictions which will also save the national foreign ng that export has not d. this will mean reduction in employment in protected industry which is not right because due to protectionism market will be bent towards domestic industry thus will lead to possible creation of employment and wage increase at home.