Why do nations practice protectionism?

• A. To shield domestic industries from foreign competition
• B. To reduce government intervention in the economy
• C. To promote unrestricted free trade
• D. To increase the efficiency of global resource allocation

Answer: (A)

Verified step by step guidance

1. Understand the concept of protectionism: Protectionism refers to economic policies and measures that a country uses to restrict imports from other countries, often through tariffs, quotas, or regulations.
2. Identify the main goal of protectionism: The primary purpose is to shield domestic industries from foreign competition, allowing local businesses to grow or survive without being undercut by cheaper or more efficient foreign producers.
3. Analyze the incorrect options: Protectionism does not aim to reduce government intervention; in fact, it involves more government control. It also does not promote unrestricted free trade, which is the opposite of protectionism. Lastly, protectionism can sometimes reduce the efficiency of global resource allocation by distorting trade flows.
4. Connect the correct answer to the concept: Since protectionism is about shielding domestic industries, the correct answer is 'To shield domestic industries from foreign competition.'
5. Summarize the reasoning: Nations practice protectionism primarily to protect their own industries from external pressures, which can help preserve jobs and maintain economic stability within the country.