Question

In order to encourage its farmers, the Cerian government provided them with low-interest loans for the purchase of seeds and fertilizers. The government also gave cash grants and made tax reductions. Which instrument of trade policy is being used by the govenment of Cerla? Multiple Choice Tanfts Subsidies voluntary export restraints Local content requrements Import qaotes

Answer 1

This is an example for subsides , the subsidies given in the form of cash grants , low interest rate and tax deductions. A subsidy will reduce the cost of the production for the producers so he can produce more and it will increase the production so the trade. A subsidy will help the nation to export more and import less.

The tariffs are levied mainly on the imports of goods and services, there are ad valorem tariffs and specific tariffs. The tariff discourages the import of the goods and services, it makes the imports more expensive. The government earns revenue from the imposition of tariffs.

The quota is the restriction on the physical quantity traded.

Ans: Subsidy.