A situation where the policies of the government make free trade and investment with other countries easy, so that the country’s economy works together with other economies in an efficient and mutually interdependent way, is called:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Integration of domestic economy
When government policies make free trade and investment with other countries easy, the domestic economy works together with other economies. This is called integration of the domestic economy.
Import substitution is the opposite idea: imports are replaced by home production behind import controls. Deregulation removes controls on industry at home, and stabilisation measures correct the balance of payments and inflation in the short run.
NCERT (2026-27): Glossary: “Integration of Domestic Economy – A situation where the policies of government facilitate free trade and investment with other countries making the domestic economy work together with other economies in an efficient and mutually interdependent way.” Glossary: “Import Substitution – A policy of the state for development of economy in which import of goods is generally substituted by domestic production (through import controls, tariffs and other restrictions) with a view to encourage domestic industry on grounds of self-sufficiency and domestic employment.” Glossary: “Stabilisation Measures – Fiscal and monetary measures adopted to control fluctuations in the balance of payments and high rate of inflation.” |