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The government provides subsidies in various sectors. Which of the following are the effects of subsidies ?
1. it increases inflation
2. it increases fiscal deficit
3. it decreases export competitiveness
Select the correct answer using the codes given below.
  • a)
    1 and 2 only
  • b)
    2 only
  • c)
    2 and 3 only
  • d)
    1,2 and 3 ​
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
The government provides subsidies in various sectors. Which of the fol...
There is no direct relation between subsidies given and inflation. It may increase inflation (eg. subsidies on LPG helping people save more thus increasing their capacity which can cause demand pull inflation.) or decrease inflation by making accessible low cost subsidized goods. Subsidies ofcourse increases fiscal deficit. Subsidies INCREASES not decreases export competitiveness of goods as it decreases their cost of production.
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The government provides subsidies in various sectors. Which of the following are the effects of subsidies ?1. it increases inflation2. it increases fiscal deficit3. it decreases export competitivenessSelect the correct answer using the codes given below.a)1 and 2 onlyb)2 onlyc)2 and 3 onlyd)1,2 and 3 ​Correct answer is option 'B'. Can you explain this answer?
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The government provides subsidies in various sectors. Which of the following are the effects of subsidies ?1. it increases inflation2. it increases fiscal deficit3. it decreases export competitivenessSelect the correct answer using the codes given below.a)1 and 2 onlyb)2 onlyc)2 and 3 onlyd)1,2 and 3 ​Correct answer is option 'B'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about The government provides subsidies in various sectors. Which of the following are the effects of subsidies ?1. it increases inflation2. it increases fiscal deficit3. it decreases export competitivenessSelect the correct answer using the codes given below.a)1 and 2 onlyb)2 onlyc)2 and 3 onlyd)1,2 and 3 ​Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The government provides subsidies in various sectors. Which of the following are the effects of subsidies ?1. it increases inflation2. it increases fiscal deficit3. it decreases export competitivenessSelect the correct answer using the codes given below.a)1 and 2 onlyb)2 onlyc)2 and 3 onlyd)1,2 and 3 ​Correct answer is option 'B'. Can you explain this answer?.
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