One of the negative impacts of export subsidy is that:
A) the price of the domestic good increases in the world market.
B) the domestic supply of the goods increases more than proportionately than increase in demand.
C) the domestic cost of production of the exportable increase.
D) it results in a general deflation and hence the domestic producers incur losses.
E) the domestic consumers are harmed as the subsidies are financed by taxing them.
Correct Answer:
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