If Slovenia were a large country in world trade,then if it instituted a large set of subsidies for its exports,this must
A)have no effect on its terms of trade.
B)decrease its marginal propensity to consume.
C)harm world terms of trade.
D)harm its terms of trade.
E)improve its terms of trade.

Question

Quizplus · Accepted Answer

If Slovenia were a large country in world trade, then if it instituted a large set of subsidies for its exports, this must harm its terms of trade. This is because a large country can influence the world price of its exports, and by subsidizing them, it will lower the world price and thus harm its own terms of trade.

If Slovenia Were a Large Country in World Trade,then If