4
lesson pretestMultiple Choice

Pretest

Question 4 • CMS 2026-2027 Economics and Personal Finance CREDIT RECOVERY

Which best describes what a subsidy does?

Answer
A
It keeps the price of domestic goods relatively low.
B
It raises the price of imported goods.
C
It encourages the import of foreign goods.
D
It eliminates all taxes on domestic goods.

Explanation

A subsidy is financial support from the government to domestic producers. It lowers their production costs, helping keep the price of domestic goods relatively low. It does not eliminate taxes on domestic goods or directly encourage imports.

AI-written and checked against the verified answer.

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