Is an Export Subsidy a Good Way for a Large

question 64

Multiple Choice

Is an export subsidy a good way for a large nation to help a poor nation by exporting products to them at lower prices?

• A) Yes, and it is a method recommended by the WTO.
• B) It can help in some cases.
• C) No; it creates inefficiency in production and it hurts firms (especially small farmers) in importing countries who cannot compete with subsidized imports.
• D) Yes; but it can get tricky when the importers demand even more quantity at lower prices.

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Definitions:

Liable

Being legally responsible or obligated to compensate for harm caused by one's actions or negligence.

Auction

A public sale where goods or property are sold to the highest bidder.

Mathematical Mistake

An error occurring in the process of performing mathematical calculations, often leading to incorrect results or conclusions.

Substantial

Of considerable importance, size, or worth.