Explain how exporting corn may be beneficial to the domestic economy.
What will be an ideal response?
Answers will vary but should refer to a net gain in domestic wealth by producers. Exporting corn is considered beneficial to the economy because it results in a net gain in domestic wealth. Corn producers are able to sell as much corn as they want in the huge world market at higher prices than they could have received in the smaller domestic market. Although domestic consumers will pay more for corn, overall the gains made by producers bring wealth into the economy and offset the consumer losses.
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Refer to Figure 24-1. Ceteris paribus, a decrease in the value of the domestic currency relative to foreign currencies would be represented by a movement from
A) AD1 to AD2. B) AD2 to AD1. C) point A to point B. D) point B to point A.
List the major non-price determinants of supply
What will be an ideal response?
Which of the following is true about inflation?
a. Inflation increases purchasing power. b. Inflation redistributes income to savers. c. Inflation shows the real value of goods and services. d. Inflation distorts the signals of value people gain from prices.
If the area between the diagonal line of absolute equality and the Lorenz curve is greater for the United States than for Japan, we can conclude that the
A. Distribution of income in Japan is as equal as in the United States. B. Relative distributions of income in the two countries are the same. C. Distribution of income in Japan is closer to being equal than in the United States. D. Distribution of income in Japan is less equal than in the United States.