Suppose that when the price of wheat is $2 per bushel, farmers can sell 10 million bushels. When the price of wheat is $3 per bushel, farmers can sell 8 million bushels. Which of the following statements is true? The demand for wheat is
a. income inelastic, so an increase in the price of wheat will increase the total revenue of wheat farmers.
b. income elastic, so an increase in the price of wheat will increase the total revenue of wheat farmers.
c. price inelastic, so an increase in the price of wheat will increase the total revenue of wheat farmers.
d. price elastic, so an increase in the price of wheat will increase the total revenue of wheat farmers.
c
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The major problem facing the economy is high unemployment and weak economic growth. The inflation rate is low and stable. Therefore, the Federal Reserve decides to pursue a policy to increase the rate of economic growth. Which policy changes by the Fed would reinforce each other to achieve that objective?
A. Buying government securities and raising the reserve requirement. B. Selling government securities and raising the discount rate. C. Buying government securities and lowering the discount rate. D. Selling government securities and lowering the discount rate.
A technological change that enables a student to learn more French in the same amount of study time
a. causes the budget line to rotate inward b. causes an outward, parallel shift of the budget line c. shifts the "demand curve" inward d. is equivalent to a increase in the "price" of an hour spent studying French e. makes the student better off
Which of the following statements does NOT describe a function of money?
A) a store of value
B) a hedge against inflation
C) a standard of deferred payment
D) a unit of accounting
A profit-maximizing firm should not undertake an R&D project for which the:
A. expected rate of return exceeds its interest-rate cost of funds. B. interest-rate cost of funds exceeds the expected rate of return. C. expected returns are in the distant future. D. the expected returns, though potentially very large, are uncertain.