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14) An export subsidy will cause the relative demand for ________ to ________ and the relative supply for ________ to ________. A) exports; decrease; exports; increase B) imports; decrease; imports; increase C) imports; increase; imports; decrease D) exports; increase; exports; decrease E) exports; increase; imports; decrease

User Vanitas
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An export subsidy will cause the relative demand for exports to increase and the relative supply for exports to increase as well.
So, the correct answer is: E) exports; increase; exports; increase

In context to your question, an export subsidy will cause the relative demand for exports to increase and the relative supply for exports to increase. This is indicated by option E. The reason behind this is when a government provides export subsidies, it becomes cheaper to produce goods for export.

This leads to an increase in supply as producers find it more profitable to sell their goods overseas. In turn, due to lower prices caused by increased supply, the demand for those subsidized exports also increases in the global market.

Understanding the relationship between export subsidy, demand, and supply can provide significant insights into the workings of international trade and economic policies.

User Lavixu
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