16
QuizMultiple Choice

Trade Barriers — Quiz

Question 16 • Economics

Which best describes what a subsidy does?

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

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.

Previous
Next