When a buyer or seller of an agricultural commodity takes action to protect against a future change in the value of the commodity, then the buyer or seller is:
A. Logrolling
B. Hedging
C. Allotting
D. Bolstering
B. Hedging
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The primary reason why the Fed cannot systematically surprise the public with its monetary policy is
A) the nonneutrality of money. B) the presence of productivity shocks that generate real business cycles independent of the monetary side of the economy. C) the presence of rational expectations among the public. D) the presence of propagation mechanisms within the economy.
The indifference principle states that
a. If an asset is mobile, then in the long run, it will be indifferent about where it is used b. In the long run, a mobile asset will make the same profit, no matter where it goes c. If an asset is mobile, then in the long run, it would stay with the first user d. Only A&B
An upward shift in the consumption function, other things being equal, could be caused by households:
a. becoming optimistic about the state of the economy. b. becoming pessimistic about the state of the economy. c. expecting future income and wealth to decline. d. None of these.
Describe the shape of the LRATC curve and what causes it to change.
What will be an ideal response?