A subsidy is a direct payment to the producers of goods or services, often provided by the government, to help them remain competitive, reduce the cost of production, or ensure their services are available at a lower price to consumers. It is not a limit on imports, a tax, or a foreign aid program.

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What Is a Subsidy

Question 38

Multiple Choice

What is a subsidy?

A) A limit on the number of goods that are imported
B) A tax on imports
C) A direct payment to the producers of goods to help them remain profitable
D) A foreign aid program directed at developing countries

Correct Answer: