If a Government Provides an Exporting Firm with Subsidies

question 37

Multiple Choice

If a government provides an exporting firm with subsidies:

• A)changes the payoff matrix in the foreign market.
• B)unambiguously increase the welfare of the domestic economy.
• C)it does not signal that it does not believe in free markets.
• D)it will provide that firm with less incentives to be competitive.

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Definitions:

Cash Realizable Value

The amount of money that can be expected to be received from receivables or other assets, after accounting for any discounts or allowances.

Allowance Method

An accounting technique that estimates and deducts accounts receivable deemed uncollectible from total accounts receivable.

Allowance for Doubtful Accounts

A contra-asset account designed to anticipate the amount of accounts receivable that might be uncollectible.

Bad Debt Expense

An accounting expense recognized when a company can no longer recover a debt that it has issued.