Question

Read the passage carefully and answer the following questions. 

The value of the ruble declined dramatically. The rate of inflation was so high that people lost all their savings. The collective farm system disintegrated leaving people without food security and the government started to import food. The old trading structure broke down with no alternative in its place. The old system of social welfare was systematically destroyed. The withdrawal of government subsidies pushed large sections of the people into poverty. 

(i) What is meant by subsidy? 

(ii) How did the disintegration of collective farm system lead to the loss of food security? 

(iii) This passage is associated to which country? Why did the government start importing food?

Answer 1

(i). Subsidy is the money paid by government to keep the value or price of a product or service low. Producing goods so that their prices can be kept low. 

(ii). Collective farm system was replaced by private farming. Capitalism in agriculture left people without food security. This sudden transition ruled out any alternate other than state controlled socialism or capitalism. 

(iii). This passage is associated with Russia. The government started to import food to make up the shortage of food.