Trade Protection Improves Current Account Balance

Steps:

• Define trade protection: Policies like tariffs or quotas that restrict imports to shield domestic industries.
• Recall current account: Part of balance of payments including trade in goods/services; deficit means imports exceed exports.
• Link protection to deficit: By curbing imports, protection boosts net exports, narrowing the deficit.
• Evaluate choices: Identify which aligns with standard economic rationale for protectionism.

Why A is correct:

• Current account deficit reflects excessive imports; protection reduces imports via barriers, improving the trade balance per the balance of payments identity (CA = X - M + net income/transfers).

Why the others are wrong:

• B: Protection worsens surpluses by limiting exports indirectly, not reducing them.
• C: Protection often aims to sustain or boost growth by preserving jobs, not reduce it.
• D: Protection can raise prices (inflationary), not reduce inflation.

Final answer: A