Many developing countries instituted import substitution policies because ?
Correct answer: C. their terms of trade were deteriorating
- A. the prices of the goods they imported were falling
- B. the price of goods they exported were increasing
- C. their terms of trade were deteriorating
- D. their terms of trade were improving
Explanation
Import substitution became attractive when developing countries faced deteriorating terms of trade, meaning export prices weakened relative to the prices of imports. Domestic production was then promoted to reduce dependence on imported manufactured goods.
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