Which of the Following Best Explains How Public Policy Creates

question 13

Multiple Choice

Which of the following best explains how public policy creates an underground market?

• A) by prohibiting goods or services or over-taxing them
• B) by prohibiting goods or services or lowering taxes on them
• C) by exporting goods to other countries
• D) by maintaining taxes on goods in the face of dwindling supply and demand

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Definitions:

Demand Price

The price of a good or service dictated by the desire and ability of consumers to purchase it at certain price levels.

Import Quota

A government-imposed limit on the quantity or monetary value of certain goods that can be imported into the country over a specified period of time.

Quota

A government-imposed trade restriction that limits the number or monetary value of goods that can be imported or exported during a specified period.

Fried Twinkie

A snack consisting of a Twinkie deep-fried, often served as a novelty food at fairs and carnivals.