Subsidy

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DEFINITION of 'Subsidy'

A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy is usually given to remove some type of burden and is often considered to be in the interest of the public.

Politics play an important part in subsidization. In general, the left is more in favor of having subsidized industries, while the right feels that industry should stand on its own without public funds.

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BREAKING DOWN 'Subsidy'

There are many forms of subsidies given out by the government, including welfare payments, housing loans, student loans and farm subsidies. For example, if a domestic industry, like farming, is struggling to survive in a highly competitive international industry with low prices, a government may give cash subsidies to farms so that they can sell at the low market price but still achieve financial gain.

If a subsidy is given out, the government is said to subsidize that group/industry.

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RELATED FAQS
  1. What are the ethical arguments against government subsidies to companies like Tesla?

    The ethical argument behind government subsidies is that they should be put into place to help industries that will, in turn, ... Read Full Answer >>
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  3. How do government subsidies help an industry?

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  4. How does investing in the airline industry differ for privately versus government ...

    Airlines with significant private ownership typically offer different opportunities to investors than government-owned companies. ... Read Full Answer >>
  5. What is the point of agricultural subsidies?

    Every five years, new legislation is introduced and passed through the U.S. Congress to subsidize farmers and agricultural ... Read Full Answer >>
  6. How does a government decide what industries to subsidize?

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  7. What are some examples of failed subsidies?

    There are a few different ways to evaluate the success of government subsidies. Most economists consider a subsidy a failure ... Read Full Answer >>
  8. What is the cost of living difference between the U.S and the U.K?

    According to Numbeo, the largest collection of cost of living data for destinations around the world, consumer prices were ... Read Full Answer >>
  9. What are the economic implications of government subsidies on fuel costs?

    In order to make the price of oil more affordable to its citizens, governments sometimes provide subsidies, which can allow ... Read Full Answer >>

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