Question : Which of the following is consistent with the import substitution policy?
Option 1: Capital account convertibility
Option 2: Flexible exchange rate policy
Option 3: Tariffs and quotas
Option 4: Current account convertibility
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Correct Answer: Tariffs and quotas
Solution : The correct option is Tariffs and quotas .
Both tariffs and quotas are consistent with import substitution policies. Import substitution is an economic policy that aims to promote domestic industries by reducing reliance on imported goods. Tariffs involve imposing taxes on imported goods, making them more expensive and less competitive against domestic products. Quotas, on the other hand, restrict the quantity of imported goods allowed into a country.
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