Question

What are likely effects (both intended and unintended) of using subsidies to raise the profits from producing coffee in Colombia?

Answer 1

Subsidies promote greater availability and supply of goods, lowered prices and thus reduced inflation, higher profits for sellers and lower debt, employment generation due to profits, etc.

However, it can have limitations like difficulties in measuring success, higher taxes on other goods, fiscal deficits for government, excess productiin and wastage of resources, etc.

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