What are import quotas?

Import quotas are limitations set by a government on the quantity of a specific product that can be imported into the country over a certain period. The primary purpose of import quotas is to protect domestic industries from foreign competition by restricting the amount of foreign goods available in the market. By limiting the quantity of imports, a country can help ensure that local businesses can compete more effectively, maintain jobs, and stabilize local prices.

The choice emphasizing restrictions on import quantities is accurate because it directly defines what an import quota entails. This regulation plays a critical role in trade policy and economic management, as it affects supply lines, pricing of goods, and the overall trade balance of a nation. Understanding this concept is essential for recognizing how governments can influence economic conditions and support local industries.

In contrast, other choices do not align with the definition of import quotas. Taxes imposed on exports refer to tariffs, which are different tools used in trade policies. Subsidies for imported goods would involve financial support to make those imports cheaper or more competitive, rather than restricting their quantity. Likewise, funds allocated for internal business expansion refers to a business’s investment in growth rather than any limitation on foreign trade.