Massachusetts AFL-CIO Scholarship Practice Exam

What effect did subsidizing the European shoe industry have on U.S. shoe towns like Brockton and Lynn?

1. It led to increased demand for their products

2. It caused economic growth in those areas

3. It undermined their local shoe industries

4. It created competition that improved quality

The correct answer is: It undermined their local shoe industries

Subsidizing the European shoe industry had a significant impact on U.S. shoe towns, particularly in places like Brockton and Lynn. This government support for foreign shoe manufacturers made it easier and cheaper for them to produce shoes, which in turn allowed them to sell their products at lower prices compared to domestically made shoes. As a result, this influx of cheaper European shoes reduced the demand for locally made footwear from U.S. manufacturers. This phenomenon is indicative of how international trade dynamics can shift local economies. The local shoe industries in towns like Brockton and Lynn, which had previously thrived, began to struggle as consumers turned to more affordable options from Europe. Consequently, local businesses faced unprecedented hardships, leading to job losses, factory closures, and an overall decline in the economic vitality of these communities. Understanding this relationship between subsidized foreign competition and the struggles of domestic industries is crucial, as it highlights the challenges that local economies can face in a global market context.