If the Support Price Is Set Below the Equilibrium Market

question 66

Multiple Choice

If the support price is set below the equilibrium market price,

• A)A surplus will result.
• B)A shortage will result.
• C)The equilibrium price will result.

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Definitions:

Smoot-Hawley

Refers to the Smoot-Hawley Tariff Act of 1930, which raised U.S. import tariffs on thousands of goods, leading to significant trade reductions worldwide.

Trade Restrictions

Measures implemented by governments to regulate or limit international trade, including tariffs, quotas, and embargoes.

Domestic Industries

Industries that produce goods or services within a country’s borders, serving the local economy.

National Industrial Recovery Act

A 1933 U.S. law aimed at boosting economic recovery during the Great Depression by regulating industry standards and promoting fair wages and hours for workers.