Does a Subsidy to Buyers Affect the Demand Curve

question 90

Multiple Choice

Does a subsidy to buyers affect the demand curve?

• A) Yes, it shifts demand up by the amount of the subsidy.
• B) Yes, it shifts demand to the right by the amount of the subsidy.
• C) No, the quantity demanded will increase, but the demand curve does not move.
• D) No, the quantity demanded will decrease, but the demand curve does not move.

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Definitions:

Government Purchases

Expenditures by government entities for goods and services that are directly consumed or used in providing public services.

Resources

The total means available for economic and political development, such as mineral wealth, labor force, and armaments.

Government Purchases

Expenditures by government bodies on goods and services that directly absorb resources or satisfy human wants.

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