How have international sanctions changed Iran's economic policy choices?

• A. Sanctions reduce oil revenue and access to finance, pushing diversification, import substitution, and state-led responses, while pressuring broader reforms.
• B. Sanctions increase oil revenue and access to finance.
• C. Sanctions have no impact on economic policy.
• D. Sanctions instantly collapse the economy.

Answer: (A)

Sanctions shrink the main source of state revenue—oil—and restrict access to international finance, so Iran must adjust its policy toolkit. With oil income constrained and borrowing harder to obtain, the country moves toward diversification away from oil, encourages domestic production to substitute imports, and relies more on state-led planning and intervention to steer investment, subsidies, and credit. This pressure also nudges broader reforms aimed at resilience and efficiency, even if progress varies in practice. The other scenarios don’t fit: sanctions do not increase oil revenue or finance access, they do have real effects on the economy, and they do not cause an instant total collapse.