What is an export subsidy? Discuss some of the recent examples where such subsidies were controversial.
What will be an ideal response?
An export subsidy is a government payment to an exporter. By reducing the exporter’s costs, such subsidies permit exporters to lower their selling prices and compete more effectively in world trade. Overt export subsidies are minor in the United States. But some foreign governments use them extensively to assist their domestic industries—a practice that provokes bitter complaints from American manufacturers about “unfair competition.” For example, years of heavy government subsidies helped the European Airbus consortium take a sizable share of the world commercial aircraft market away from U.S. manufacturers like Boeing and McDonnell-Douglas—a trend that has lately reversed.
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The interest rate effect operates through
A) labor supply. B) government spending levels. C) the purchasing power of individuals' checking accounts. D) credit markets by changing borrowing costs.
When Ronald takes another economics class, other people in society benefit. The benefit to these other people is called the marginal ________ benefit of the class
A) social B) private C) external D) Coasian E) extra