Question

Per-unit subsidies provided by foreign governments to foreign firms ________ total domestic market supply, which ________ the domestic price of the subsidized foreign product. a) decrease; raises b) increase; raises c) increase; depresses d) decrease; depresses

Answer 1

The correct answer is c) increase; depresses.

Step-by-step explanation:

A subsidy, as a stimulus for the economy, is the difference between the actual price of a good or service and the actual price charged to the consumer of these goods or services.

In economics, the subsidy is applied to artificially stimulate the consumption or production of a good or service. They are the mechanisms against taxes.

A subsidy can be given by the state or the government, with a purpose of economic stimulus to support the native population of low resources.