The implicit price paid by the government for surplus crops taken as collateral for loans to farmers is called
A)The interest rate.
B)A countercyclical payment.
C)A loan subsidy.
D)The loan rate.

Question

Quizplus · Accepted Answer

The implicit price paid by the government for surplus crops taken as collateral for loans to farmers is called the loan rate. This is the price at which the government is willing to lend money to farmers, and it acts as a floor on the market price of the crops. If the market price falls below the loan rate, farmers can choose to forfeit their crops to the government in exchange for the loan, which effectively sets a minimum price for the crops.

The Implicit Price Paid by the Government for Surplus Crops