The International Substitution Effect of a Change in the Price

question 173

Multiple Choice

The international substitution effect of a change in the price level results from a

• A) change in the price of foreign goods relative to domestic goods.
• B) change in the price of current goods relative to future goods.
• C) change in the purchasing power of wealth.
• D) Both answers B and C are correct.

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Definitions:

Agricultural Act of 2014

A United States federal law that established policies for agricultural and food programs, often referred to as the 2014 Farm Bill.

Crop Insurance

A risk management tool that protects agricultural producers against loss of their crops due to natural disasters, such as flood, hail, drought, or loss in revenue due to declines in the prices of agricultural commodities.

Price Support

A government intervention mechanism to maintain the price of a commodity at a certain level by buying excess supply or offering subsidies.

Price-Support Program

Government interventions to maintain the market price of a commodity or product above its equilibrium level to support the income of producers.