Which term describes government measures like subsidies to aid domestic producers?

Which term describes government measures like subsidies to aid domestic producers?

• A. Tariffs
• B. Quota
• C. Subsidy
• D. Trade Wars

Answer: (C)

Subsidy refers to government measures that provide financial support to domestic producers, such as direct payments, tax relief, or price supports. This help lowers production costs or increases incentives to produce, making domestic goods more competitive relative to imports. By boosting domestic production, subsidies can shift the supply curve to the right and encourage higher output, sometimes at lower prices for consumers. The other terms describe different trade tools: tariffs raise the price of imported goods, quotas limit how much can be imported, and trade wars describe a broader sequence of protectionist actions between countries.

Subsidy refers to government measures that provide financial support to domestic producers, such as direct payments, tax relief, or price supports. This help lowers production costs or increases incentives to produce, making domestic goods more competitive relative to imports. By boosting domestic production, subsidies can shift the supply curve to the right and encourage higher output, sometimes at lower prices for consumers. The other terms describe different trade tools: tariffs raise the price of imported goods, quotas limit how much can be imported, and trade wars describe a broader sequence of protectionist actions between countries.