With reference to the international trade, how the subsidy is different from tariff?
1. While tariff changes the price of imports, the subsidy changes the quantity of imports
2. While the cost of a tariff is borne by consumers, the cost of a subsidy is borne by producers
Choose the correct option from the codes given below:
The first statement is not correct. The second is also not correct. The cost of a tariff is borne by consumers, the cost of a subsidy is borne by tax-payers and not the producers.
This question is a part of GKToday's Integrated IAS General Studies Module