If the Government Imposes a Binding Price Floor on Sugar

question 13

Multiple Choice

If the government imposes a binding price floor on sugar, it may also have to

• A) establish programs to expand supply in the private sector.
• B) establish programs to reduce demand in the private sector.
• C) produce some sugar itself.
• D) purchase the surplus sugar.

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Definitions:

Weakening

A term often used to describe a decline in the strength or value of an asset or currency.

Portfolio Investment

Investments in a variety of financial assets, such as stocks, bonds, and commodities, to diversify risks.

Direct Investment

Refers to buying and holding a significant amount of interest in a foreign company or investing in a manner that grants control over the operations and management.

Securities

Securities that signify ownership in a company listed on the stock market, a debt owed by a corporation or government entity (bonds), or entitlements to ownership through options.