Suppose that corn prices rise significantly. If farmers expect the price of corn to continue rising relative to other crops, then we would expect:
A. consumer demand for wheat to fall.
B. the supply of ethanol, a corn-based product, to increase.
C. the supply to fall as farmers plant more of other crops.
D. the supply to increase as farmers plant more corn.
Answer: D
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Use the following graph to answer the next question.
A shift of the aggregate demand curve from AD1 to AD0 might be caused by a(n) ________.
A. decrease in net export spending B. increase in aggregate supply C. increase in investment spending D. decrease in the amount of output supplied
Quantitative evidence from Fishlow, Fogel and Mercer indicates that
a. antebellum railroads were built ahead of demand, but post-bellum transcontinentals were not. b. post-bellum transcontinentals were built ahead of demand, but antebellum railroads were not. c. both antebellum railroads and post-bellum railroads were built ahead of demand. d. antebellum railroads were not built ahead of demand, but the evidence on post-bellum railroads is mixed.
The income effect describes the:
A. decrease in the quantity of labor supplied in response to a lower wage. B. increase in the quantity of labor supplied in response to a higher wage. C. increase in the quantity of labor supplied due to the greater demand for leisure caused by a higher income. D. decrease in the quantity of labor supplied due to the greater demand for leisure caused by a higher income.
An increase in a country’s terms of trade means that
a) export-import contracts are of longer duration b) imports have become relatively more expensive c) the exchange rate is rising d) the benefits from trade are increasing e) the country is becoming less open to foreign trade