Final answer:
Subsidies to U.S. firms that export goods or services are most likely to increase U.S. exports. They directly lower production costs and support firms' competitive pricing, which can lead to increased exports. In contrast, other options like reducing the budget surplus or import restrictions do not directly incentivize exporting activities. (b).The government reduces the size of the budget surplus.
Step-by-step explanation:
Given the options, subsidies to U.S. firms that export goods or services are most likely to increase U.S. exports. This action would directly lower the cost of production for these firms, enabling them to sell their goods at more competitive prices in the international markets. Moreover, subsidies can act as a form of government assistance that encourages companies to focus on export activities, potentially leading to an increase in the volume of goods and services sent abroad.
Reducing the budget surplus or unilaterally reducing restrictions on foreign imports, on the other hand, would not have as direct an impact on increasing exports. While such measures might have various economic effects, they do not specifically incentivize U.S. firms to export more. In contrast, subsidies align with the goal of promoting exports by making U.S. products more attractive on the global stage due to lower prices or improved profit margins for U.S. companies.
Relative prices and trade policies also play significant roles in affecting the balance of trade. If U.S. goods are cheaper due to competitive advantages such as productivity breakthroughs, exports are likely to increase. However, if the exchange rate makes U.S. goods more expensive internationally, exports might decrease. Trade policies that provide government assistance to boost exports, such as subsidies, are therefore critical tools in the enhancement of a nation's export capacity.