How can we link the lack of futures markets in poor countries to the fact that farmers in poor countries are likely to remain poor?
What will be an ideal response?
As discussed in the chapter, the access to and use of futures markets allows individuals to transfer risk to those most willing to bear it. For example, a wheat farmer in the U.S. does not need to worry about the price of wheat falling when the crop comes in, because the farmer can sell a futures contract at a specified price. As a result of transferring this risk, the farmer will plant a larger crop and have a higher income. But as we also saw in the chapter, the use of futures requires the posting of margins. This is something that poor farmers would find very difficult to do. As a result, many poor farmers do not have access to the futures market, cannot transfer risk, and as a result plant smaller crops and have lower incomes.
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The productivity speed-up in the United States began in the
A. mid-1970s. B. mid-1980s. C. mid-1990s. D. beginning of 2001.
The major factor affecting a nation's balance of payments is
A. an increase in its rate of unemployment. B. its stock market movements. C. a change in the productivity of its labor. D. its rate of inflation relative to the rate of inflation of its trading partners.
Refer to the figure above. If the pre-tax equilibrium price of Good X was $3 and the price that consumers need to pay after the imposition of a per-unit tax of $3 is $5, the tax incidence on consumers is approximately ________
A) 50% B) 2% C) 3% D) 67%
Which of the following best describes supply-side economics?
A) Education affects the incentive to work, save, and invest and, therefore, aggregate supply. B) Tax rates, particularly marginal tax rates, affect the incentive to work, save, and invest and, therefore, aggregate supply. C) Labor productivity affects aggregate supply. D) Education affects labor productivity which affects aggregate supply.