Commodity-backed money is:
A. any form of money that can be legally exchanged into a fixed amount of an underlying commodity.
B. money created by rule.
C. money used for the exchange of large commodities.
D. any form of money that also has a role as a commodity.
AACSB: Reflective Thinking
A. any form of money that can be legally exchanged into a fixed amount of an underlying commodity.
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Suppose the market-clearing price of wheat is $2.50 per bushel. What would happen if wheat farmers persuaded the government to set a legally-mandated price support of $3.75 per bushel?
A) The quantity demanded of wheat would fall. B) The quantity supplied of wheat would rise. C) A surplus of wheat would occur. D) All of the above.
Which of the following provides the most reasonable explanation for why agricultural interests lobby for higher farm subsidies and price supports?
a. Without the farm subsidies, food shortages would result. b. Subsidies promote the efficient use of agricultural resources. c. Agricultural interests seek a redistribution of income favoring themselves. d. The price support programs reduce food costs, which helps the poor.
A consumer consumes two normal goods, popcorn and Pepsi. The price of Pepsi rises. The substitution effect, by itself, suggests that the consumer will consume
a. more popcorn and more Pepsi. b. less popcorn and less Pepsi. c. more popcorn and less Pepsi. d. less popcorn and more Pepsi.
An increase in capital stock would
What will be an ideal response?