Subsidies protect jobs in struggling industries

Steps:

• Identify the purpose of subsidies: governments use them to support industries facing high costs or competition.
• Evaluate each option for alignment with economic goals like employment or trade balance.
• Eliminate options that suggest thriving conditions or easy transitions, as subsidies target problems.
• Select the option highlighting a clear economic issue like rising unemployment.

Why D is correct:

• Subsidies counteract structural unemployment in specific regions, as defined in labor economics, by keeping workers employed and avoiding social costs.

Why the others are wrong:

• A: Cheaper imports worsening balance of payments might justify tariffs, not subsidies, which address domestic costs.
• B: Growing economy from other sectors reduces need for subsidies, indicating overall strength.
• C: Easy retraining implies low intervention need, making subsidies unnecessary.

Final answer: D