How that demand stimulus will work for both policies

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Question - During the past few months, the Trump administration has embarked into a trade war with China. While the main intended outcome of that war was to improve the trade balance, local farmers in the US were among the ones severely affected by that war. It turned out that, due to the increase in factor costs from imported parts, they faced a potential decrease in their supply of farming products.

1. Graphically represent how a supply cut will affect the market price of farming products in the US.

2. Graphically represent how supply subsidies from the government meant to increase supply will help restore the original market equilibrium.

3. Propose two policies that can help restore the equilibrium price on the demand side and graphically represent how that demand stimulus will work for both policies.

Reference no: EM133276741

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