Question

Which of the following best states the purpose of a government subsidy?

Answer 1

C) to protect domestic producers against international competition - best states the purpose of a government subsidy.

Explanation:

A government subsidy is the financial grant provided by the government people, private institutions, public entities etc in the interest of the general public and to promote economic growth.

This encourages and protects the local private companies and domestic producers against the monopoly trading of international companies.

Subsidies help them to reduce manufacturing costs and increase their productivity. Subsidies also provide the confidence for the domestic producers to export their goods and yield more profit.

Subsidies encourage domestic consumers to buy more from the domestic market.