Western Governors University (WGU) ECON2000 D089 Principles of Economics Practice Exam

The correct answer is protectionism. This economic strategy is designed to shield a country’s domestic industries from foreign competition by implementing various measures that restrict imports. These measures can include tariffs, which are taxes placed on imported goods, and quotas, which limit the quantity of specific goods that can be imported within a given timeframe. By limiting imports, protectionism aims to encourage consumers to buy domestically produced goods, thus supporting local businesses and preserving jobs within the economy.

This approach is often justified by the belief that protecting domestic industries is essential for economic stability, preserving jobs, and promoting national security. However, while it can temporarily protect certain industries, it may lead to higher prices for consumers and potential retaliation from trading partners, affecting international trade relations.

Other strategies mentioned, such as free trade, advocate for the unrestricted exchange of goods and services across borders, promoting competition and efficiency. International cooperation involves countries working together to address mutual issues, which often includes reducing trade barriers. Market expansion refers to increasing a firm's presence in existing or new markets, which can involve competing directly with foreign businesses rather than limiting imports.