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Economics vocabulary · Fiscal Policy and Public Finance

Subsidy

Meaning in economics, with examples

/ˈsʌbsədi/nounCommon term

In economics, subsidy means: Money or other support that a government gives to producers or consumers to lower the price of a product or to encourage an activity.

In Turkish: sübvansiyon, devlet desteği, destek ödemesi

How it is used

Common examples are farm subsidies, energy subsidies and support for public transport or electric cars. Governments grant, provide, cut or phase out subsidies. The verb is subsidise (UK) or subsidize (US): the government subsidises bread.

Example sentences

  1. Energy subsidies kept electricity bills low but cost the budget billions.

  2. Farmers receive subsidies for diesel and fertiliser.

Common collocations

  • energy subsidies
  • farm subsidies
  • phase out subsidies
  • government subsidy
  • subsidy for
  • government spendingMoney that the state spends on public services, investment, salaries and social payments such as pensions; a key tool of fiscal policy.
  • incentiveSomething such as a reward, a price or a penalty that encourages people or firms to act in a particular way.
  • taxationThe system by which a government collects money from people and businesses through taxes on income, profits, spending and property.
  • externalityA cost or benefit of an activity that falls on people who are not part of the deal and is not reflected in the market price.
  • market failureA situation in which a free market, left alone, does not produce an efficient outcome for society, so too much or too little of something is produced.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Fiscal Policy and Public Finance

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This page explains English vocabulary for learners. It is not financial advice.