Explain the impact of speculators on markets is similar and how it may be different from the impact of exporters and importers.
What will be an ideal response?
Both speculators and exporters/importers try to buy low and sell high. Exporters and importers can observe prices, whereas speculators have to guess about what might happen to prices in the future (by speculating about how demand and supply might change in the future). In a world of complete certainty, speculators trade across markets in time just as exporters/importers trade across geographic markets. But in an uncertain world where demand and supply might change in the future in unpredictable ways, speculators may "guess wrong" whereas exporters/importers don't have to guess. Thus, while speculators will cause prices to equalize across time under certainty just as exporters/importers cause prices to equalize across space, their behavior may also lead to greater price differences if they jointly guess wrong. Other more minor differences are that exporter/importers have to pay the cost of transporting goods across space while speculators have to pay "storage costs" if they buy now and sell later.
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Banks are most dominant in the financial markets of ________
A) Canada and Germany B) Germany and Japan C) Japan and the United States D) the United States and Canada
An effluent fee is a
A) subsidy given to the producer of a positive externality. B) charge to a polluter that gives the right to discharge pollution into the air. C) fine imposed on a polluter for dumping illegal pollution. D) charge for a public good.
The short-run aggregate supply curve _____
Fill in the blank(s) with the appropriate word(s).
There is a distinction between the long-run aggregate supply (LRAS) curve and the short-run aggregate supply (SRAS) curve. In the long run
A. technology is fixed, but not in the short run. B. all adjustments to changes in the price level have been made, but in the short run all changes in the price level do not occur. C. the price level is constant in the long run, but fluctuates in the short run. D. the aggregate supply curve is horizontal, while in the short run it is upward sloping.