Why Do Countries Subsidize Exports When They Suffer Net Welfare

question 25

Multiple Choice

Why do countries subsidize exports when they suffer net welfare losses from these subsidies?

• A) Exporters receiving the subsidy engage in rent-seeking activities.
• B) Exports generate positive externalities.
• C) Exports provide foreign currency.
• D) Exports provide jobs.

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Definitions:

Cognitive Dissonance

The mental discomfort experienced by an individual who holds two or more contradictory beliefs, values, or ideas at the same time.

Expectancy Disconfirmation Model

A theory that suggests consumer satisfaction is based on comparing actual product performance against pre-purchase expectations.

Fast-food Restaurant

A restaurant that offers quick service, convenience, and food that is prepared in a standardized way.

Lateral Cycling

The reuse or repurposing of products or materials in ways other than their intended use, often to extend their lifecycle or reduce waste.