Question

An export subsidy should have the opposite effect of
a. capital flight.
b. a government budget deficit.
c. a tariff.
d. an increase in private saving.

Answer 1

An export subsidy is intended to encourage domestic producers to sell goods abroad by making their products cheaper in foreign markets. This can lead to increased exports. The opposite effect of an export subsidy would be a tariff, which is a tax on imports that makes foreign goods more expensive and less attractive, thereby reducing imports.

Thus, the correct answer is:

**c. a tariff.**