Economic theory predicted that the price of a depletable resource would rise by 10 percent. In reality, the price fell by 5 percent. Which of the following events could explain this discrepancy?
a. Known reserves of the resource were depleted.
b. The interest rate rose by 15 percent.
c. Antitrust enforcement broke up a cartel among major suppliers of the resource.
d. The government imposed an effective price floor.
c
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Intermediaries, known as middlemen, specialize in
A) reducing transaction costs. B) negotiating high prices for sellers. C) negotiating low prices for buyers. D) encouraging consumers to buy goods on credit, rather than with cash.
The aggregate demand curve shifts due to changes in consumption expenditures, investment expenditures government spending, and net exports
a. True b. False Indicate whether the statement is true or false
In the mortgage securitization process, "tranching" means:
a. Separating mortgage cash flows into securities of varying risks and returns. b.Pooling risks by combining mortgages with high and low credit ratings. c. Creating a whirlpool of speculative activity by offering easy credit terms to borrowers who do not have the capacity repay their loans. d. Creating new incentives for families to own homes. e. None of the above.
When actual GDP goes below potential GDP, it means that
A. deflation is imminent. B. economic activity has slowed. C. economic activity has increased. D. inflation is imminent.