Advocates of industrial policy maintain that government should ?
Correct answer: B. grant subsidies to firms offering potential comparative advantage
- A. pursue free trade as a policy that leads to maximum global efficiency
- B. grant subsidies to firms offering potential comparative advantage
- C. provide loans to domestic workers in exporting industries
- D. increase interest rates on loans made to firms in import-competing industries
Explanation
Industrial-policy advocates support government assistance to industries believed capable of developing comparative advantage, commonly through targeted subsidies. Free trade advocates, rather than industrial-policy advocates, emphasize maximum global efficiency without such intervention.
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