If a large nation subsidizes its exports, it will increase its
Supply to the world and:
A)will prosper through increased jobs for workers and profits for its firms.
B)the world price will fall.
C)consumers in the home nation will benefit through lower prices.
D)the nation will increase its imports as well.

Question

Quizplus · Accepted Answer

When a large nation subsidizes its exports, it increases the quantity supplied to the world, which shifts the supply curve to the right. This results in a surplus of the product in the world market, causing the world price to fall (as per the law of supply and demand). As a result, consumers in other countries benefit from lower prices, while the domestic producers receive a lower price for their exports. However, this does not necessarily lead to increased jobs and profits for the domestic firms, nor does it increase imports.

If a Large Nation Subsidizes Its Exports, It Will Increase