The Effect of Substituting an Equal-Cost Lump-Sum Grant for an Excise

Multiple Choice

The effect of substituting an equal-cost lump-sum grant for an excise subsidy is to:

A) increase the consumption of the subsidized good and increase the consumption of other goods.
B) decrease the consumption of the subsidized good and increase the consumption of other goods.
C) decrease the consumption of the subsidized good and decrease the consumption of other goods.
D) increase the consumption of the subsidized good and decrease the consumption of other goods.