Economics Balance Of Trade Questions
Subsidies can have both positive and negative effects on the balance of trade. On one hand, subsidies can help domestic industries become more competitive by reducing their production costs. This can lead to increased exports and a favorable balance of trade. On the other hand, subsidies can also distort international trade by artificially lowering the prices of domestically produced goods. This can lead to increased imports and a negative impact on the balance of trade. Therefore, the role of subsidies in the balance of trade depends on how they are implemented and their overall impact on the competitiveness of domestic industries.