In the long run, a year-long drought that destroys most of the summer's wheat crops causes permanently:
A. higher prices.
B. lower prices.
C. lower output.
D. None of these is true.
Answer: D
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If Atlantis has an open economy, then it:
A. does not trade with other countries B. has a democratically elected government C. trades with other countries D. allows imports but not exports.
Covered interest arbitrage ensures
A) exchange parity. B) purchasing power parity. C) interest parity. D) All of the above.
Some argue that "financing an investment with your own personal funds is always less expensive than borrowing the funds from a bank because it's an interest-free loan.". To an economist, this argument
a. is true because borrowed funds involve an explicit cost, while use of one's own funds involves only an implicit cost b. ignores the opportunity cost associated with using one's own funds c. is false because the bank can always match the interest rate offered on the loanable funds market d. is true only if the investment generates less revenue than the revenue generated by the interest-bearing deposit in the bank e. ignores the cost of sacrificing present consumption
Regulation of business, according to the legal cartel theory, stems from:
A. The public wanting protection from potentially capricious firms B. Economists who see greater efficiency in regulated industries C. Lawyers whose jobs are more secure in cartels D. Firms wanting to be regulated in order to shut off competition