Export subsidies are considered a second-best policy approach as they distort international trade and can lead to retaliation from other countries. They are also costly to taxpayers and can lead to inefficiencies in resource allocation. Ideally, trade barriers should be eliminated through multilateral negotiations and agreements.

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Export Subsidies

Question 9

Multiple Choice

Export subsidies:

A) are a first-best policy approach to remedy a problem.
B) are not costly to domestic consumers.
C) are less expensive than the value of the incomes of workers protected.
D) are a second-best policy approach.

Correct Answer: