3
QuizMultiple Choice

Trade Barriers — Quiz

Question 3 • Economics

Which best describes what a subsidy does?

Answer
A
It encourages the import of foreign goods.
B
It raises the price of imported goods.
C
It keeps the price of domestic goods relatively low.
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.

Previous
Next