Which of the following statements best describes the demand for agricultural commodities?
A. It takes a small decline in price to induce a large increase in the amount of agricultural
products demanded.
B. The marginal utility of additional units of agricultural output diminishes very rapidly.
C. Small increases in income cause demand to increase by a proportionately larger amount.
D. When price declines, the resulting substitution effect is very large.
Answer: B
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Which of the following is not an argument in favor of restricting trade?
a. to preserve national security b. to prevent dumping c. to increase consumer surplus d. to protect infant industries e. to protect declining industries
A nominal anchor is a commitment to keep nominal variables within limits, often tied to an external value or price. When nations do not incorporate such discipline into their monetary policy, exchange rates are often:
a. irrelevant to economic activity. b. extremely volatile, because traders consider monetary shocks to be permanent. c. less dependent on monetary variables. d. determined by political considerations rather than economic fundamentals.
If the slope of a straight line is 4 and if X (the variable on the horizontal axis) increases by 12, then Y (the variable on the vertical axis) will
A. decrease by 3. B. increase by 3. C. increase by 48. D. decrease by 0.33.
The automatic mechanism can best be described as:
A) the process of the economy adjusting back to potential GDP without any action taken by the government B) the result of monetary policy implemented by the Fed restoring full employment C) how fiscal policy is used to return the economy to its potential D) using rule-based policies to stabilize the economy