with different forms of money.what are the effect of subsidies on agregate money values?

Question

and can you help me with the state of value(relative flux)of the positive and negative values of monetary expeditures as of the texture of money(please help I'm trying to make a series of venn diagrams with textures and I need help refining my aproach, serious answers would help most.thank you

Answer 1

Subsidies always hurt real money values. In addition, as taxes are paid to fund subsidies, it further dilutes the value. In an extreme case, picture only 3 elements: A dairy farmer, A worker, and the goverment.

The worker makes $100. Milk costs $10. The government subsidies the milk with $9 (inefficiently) and then the worker gets taxed $15. Now the worker really makes $85 and the true cost of milk has gone from $10 to $16. The worker is only paying $1 for the milk at the store though! Yipppeee!!!