Question

Explain and evaluate: “Industry complains of the higher taxes it must pay to finance subsidies to agriculture. Yet the trend of agricultural prices has been downward, while industrial prices have been moving upward, suggesting that on balance agriculture is actually subsidizing industry.”

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Answered 7 months ago

The parity ratio of farmers (prices received by farmers divided by the prices paid by farmer) is declining through the years, so basically the farmers have been subsidizing society. The subsidies to agriculture have also increased the supply of farm products and decreased prices, thus the subsidies are highly related to the lower prices.

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