How do sanctions influence Iran's fiscal behavior in relation to social programs?

• A. They force a reduction in all government spending without substitutes.
• B. They prompt immediate austerity measures eliminating subsidies.
• C. They prompt subsidies and social programs, borrowing if needed, and planning fiscal measures guided by the Supreme Leader.
• D. They attribute budget surpluses due to tax increases.

Answer: (C)

Sanctions tighten Iran’s fiscal space by reducing revenue (especially from oil) and limiting access to external finance, so the government protects social commitments while finding ways to cover the gap. In practice, Iran maintains subsidies and social programs, borrows domestically or uses funding channels tied to the state, and plans fiscal measures with direction from the Supreme Leader. This combination matches how Iran responds to sanctions: preserve social safety nets, lean on borrowing when needed, and coordinate budgeting under leadership oversight to maintain legitimacy and stability. The other options don’t fit because they imply sweeping cuts without substitutes, immediate elimination of subsidies, or unexpected budget surpluses despite revenue pressures from sanctions.