What was the impact of protectionism on domestic industries?

The correct answer highlights that protectionism leads to the safeguarding of domestic industries from foreign competition. When a government implements protectionist measures, such as tariffs, quotas, or subsidies, it deliberately limits foreign imports to allow local businesses to thrive. This protection provides domestic industries with a buffer against international competition, which can help them grow and maintain jobs.

The economic rationale behind this is that, in theory, by lessening competition from foreign entities, domestic industries can increase their market share, invest in innovation, or improve their services and products. Over time, this might lead to enhanced economic stability within the country and the potential growth of homegrown companies.

The other options do not accurately reflect the impact of protectionism. For instance, increased reliance on foreign goods would contradict the intention of protectionist policies. Similarly, while protectionism might promote competition among local businesses by shielding them, the primary impact is the protection against foreign competition rather than fostering competition in a broader sense. Finally, protectionism does not typically decrease consumer prices for imported goods; in fact, such measures are likely to raise prices due to tariffs or reduced availability of foreign products.