Which term describes a payment mechanism intended to support increased service by a carrier?

• A. Subsidy
• B. Incentive
• C. Grant
• D. Loan

Answer: (A)

Subsidy explains a payment mechanism that is aimed at supporting and expanding service by a carrier. By providing financial support to cover operating costs or to enable more routes and higher service levels, subsidies help keep service available and affordable, especially where the market alone wouldn’t sustain it.

Incentives are tied to achieving specific targets or behaviors, not primarily about increasing service across the board. Grants are funds given for a particular project and are often time-limited. Loans are borrowed money that must be repaid with interest.

So, for the goal of backing increased carrier service, a subsidy is the most appropriate term.