Definition check: What do “subsidies” mean in public finance? Full question: Choose the most accurate description of subsidies as used by governments in markets. Choose the correct option.
General Knowledge
Indian Economy
Difficulty: Easy
Choose an option
-
AGovernment transfers to producers or consumers to reduce prices or support output
-
BCompulsory payments by citizens to finance public goods
-
CAdministrative penalties imposed for market misconduct
-
DTariff charges levied on imported goods at the border
Answer
Correct Answer: Government transfers to producers or consumers to reduce prices or support output
Explanation
Given data
- Term: Subsidies.
- Context: Government intervention in markets.
Concept / Definition A subsidy is a budgetary transfer from the government to producers and/or consumers intended to lower the effective price paid, raise the price received, and/or encourage production or consumption of the targeted good/service.
Examples Fertilizer subsidy to farmers; food subsidy to consumers via PDS; interest subvention on priority-sector loans.
Final Answer Government transfers to producers or consumers to reduce prices or support output.