Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
To increase government revenue
B
To promote the production of goods and services
C
To reduce the overall tax burden on citizens
D
To eliminate all forms of competition
Understanding the Answer
Let's break down why this is correct
Answer
The primary purpose of government subsidies in an economy is to support certain industries or activities that are beneficial to society but may not be profitable on their own. By providing financial assistance, the government encourages businesses to produce goods or services that can lead to positive outcomes, such as clean energy or education. For example, if a government gives subsidies to solar energy companies, it helps lower the cost of solar panels, making them more affordable for people. This not only promotes renewable energy but also reduces pollution and helps fight climate change. Overall, subsidies aim to correct market failures and ensure that important social needs are met.
Detailed Explanation
Government subsidies help businesses produce more goods and services. Other options are incorrect because Some might think subsidies help the government earn more money; It's a common belief that subsidies lower taxes for everyone.
Key Concepts
government subsidies
Topic
Government Subsidies and Externalities
Difficulty
easy level question
Cognitive Level
understand
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