Which term refers to a government payment to farmers to support crop prices?

• A. Subsidy
• B. Grant
• C. Tax Credit
• D. Allowance

Answer: (A)

A subsidy is a government payment to farmers that helps support crop prices. By providing funds directly to producers, the government helps stabilize farmers’ income and can keep market prices from dropping too low, which reduces the financial risk of farming and helps ensure a steady food supply. This is different from a grant, which is money given for a specific project or purpose; a tax credit, which reduces the amount of taxes owed; or an allowance, a general payment not tied to maintaining a crop price. In U.S. history, farm subsidies have been used in various forms since the New Deal era to stabilize prices and incomes, though they can influence market competition and budget considerations.