CMA Foundation · Fundamentals of Business Economics and Management · Economic and Business Environment
When the government of India reduces licensing requirements, lowers import tariffs and allows greater foreign investment, the policy direction is best described as:
The policy direction is liberalisation. It means reducing government controls such as industrial licensing, import tariffs and limits on foreign investment so that businesses operate more freely. Nationalisation and protectionism move in the opposite direction, while demonetisation concerns withdrawing currency notes from legal tender status.
- ANationalisation
- BLiberalisationCorrect
- CProtectionism
- DDemonetisation
Explanation
Liberalisation means relaxing government controls such as licensing, tariffs and investment restrictions to give markets more freedom. Nationalisation transfers private assets to the state, protectionism raises barriers to trade, and demonetisation withdraws currency notes from legal tender status.
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