PRC-3 · Chapter 10 · Question 44 of 70
To prevent wild price fluctuations in agriculture, a government establishes a 'Buffer Stock'. What action must the government take if there is a severe shortage of crops causing prices to spike?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Release (sell) its stored crops into the market
Explanation
In a buffer stock scheme, the government prevents prices from rising too high during a shortage by selling its previously stored reserve crops to increase market supply.
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