Question

Problem 8

Answer 1

Introduction

Protection Policy is described as a strategy that restricts the import of low-cost items in order to safeguard native businesses from global competitors.

The government supports certain sectors by preferential purchasing, incentives, and trade protection, such as the imposition of high import tariffs on foreign products. As a result, this will aid in the development of domestic companies and the creation of jobs in such sectors.

However, because of trade obstacles and the shielding of domestic sectors against low-cost imported items, the cost of products in those domestic producers will rise. If such items are intermediary commodities in other sectors, their manufacturing costs will rise as well.