Assume that the United States imports chemicals from Germany.Trade theory predicts that if the German government grants an export subsidy to its chemical firms, the overall welfare of the United States will increase.

Question

Quizplus · Accepted Answer

An export subsidy from the German government to its chemical firms would lower the cost of chemicals for importers in the United States, potentially reducing prices for consumers and industries that use these chemicals, thereby increasing the overall welfare of the United States.

Assume That the United States Imports Chemicals from Germany