The infant industry argument calls for active government ...

[@Brianna17]

The infant industry argument calls for active government involvement
 
  A) only if the government forecasts are accurate.
  B) only if some market failure can be identified.
  C) only if the industry is not one already dominated by industrial countries.
  D) only if the industry has a high value added.
  E) only if the industry is independently able to earn high returns.

Question 2

What is immizerizing growth? Describe how it could happen and give at least one cited historical example.
 
  What will be an ideal response?

[dpost18]

Answer to Question 1

B

Answer to Question 2

Immizerizing growth represents economic growth that results in a reduction in national welfare. When a large country expands its productive capacity of an exported good, the biased economic growth will have effects on the country's terms of trade. This occurs because the growth causes a more than proportionate increase in the supply of exports to the world market and in the demand for imports from the world market, thereby negatively affecting the terms of trade. Immizerizing growth is probably not a common phenomenon, but it may have occurred in the Netherlands in the 1960s. Other countries besides the Netherlands have experienced this kind of problem, but since it was first reported here, the phenomenon is commonly known as the Dutch disease.