Removing barriers or restrictions set by the government on trade is known as _______.
- A.Globalisation
- B.Liberalisation
- C.Privatisation
- D.Arbitration
Show answer
Correct answer: B. Liberalisation
Explanation
The correct answer is B, liberalisation. Liberalisation means freeing economic activity from government controls: industrial licences, import licences and quantitative restrictions, ceilings on investment and administered interest rates. In India this was the first strand of the reforms of 1991. Option A is wrong because globalisation is the wider integration of a country's economy with the world through trade, investment, technology and movement of people; removing trade barriers helps globalisation but the act itself is liberalisation. Option C is wrong because privatisation is a transfer of ownership or management from the state to private hands, which is a question of who owns a firm rather than of what rules it must follow. Option D is wrong because arbitration is a method of settling disputes outside the courts and has nothing to do with trade policy.