Purchasing power parity (PPP) measurements of income are a way to ...

[123654777]

Purchasing power parity (PPP) measurements of income are a way to make international comparisons by correcting for national differences in
 
  A) unemployment.
  B) inflation.
  C) prices of goods and services.
  D) economic growth.

Question 2

Agricultural subsidies are known to cause overproduction and create other problems. Are there benefits from such subsidies? Explain.
 
  What will be an ideal response?

[wilsonbho]

Answer to Question 1

C

Answer to Question 2

Subsidies given by high-income countries to support their farmers will lead to cheaper world food prices, all other factors being equal. This benefits some countries where there is a large urban working class. For example, many young Chinese farmers have migrated to the cities where they work in factories. Given that the productivity of these individuals in agriculture is very low, the country as a whole gains when they become city dwellers and factory workers, while cheaper food makes life easier and raises living standards. As a result, agricultural subsidies in high-income countries benefit China and some other developing countries. Also, countries often have cultural reasons to protect agriculture, including its role in the history of the country and worries about self-sufficiency.