Which of the Following Is True of an Excise Subsidy

Multiple Choice

Which of the following is true of an excise subsidy?

A) An excise subsidy has both an income and a substitution effect which causes the consumption of the subsidized good to rise.
B) An excise subsidy has a substitution effect since the subsidy artificially lowers the price of the subsidized good causing the consumer to increase consumption of the good,but no income effect.
C) An excise subsidy increases consumption of a good by the same quantity as does a cash transfer but at a lower cost to the government.
D) An excise subsidy has an income effect since the subsidy increases the consumer's income but no substitution effect.