Improved technology has reduced the risk of grain loss during storage. If wheat farmers expect wheat prices to rise substantially in about four months from now, which of the following is likely to be true?
a. The current supply of wheat will decline, as farmers store wheat in anticipation of the higher prices.
b. The price of wheat breads is likely to decline in the future.
c. The expectation of higher prices in the future is unlikely to have any impact on current wheat supply.
d. The supply of wheat is likely to increase immediately.
a
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If the federal funds rate is set by the Taylor rule and the output gap increases by 5 percentage points, everything else remaining unchanged, the federal funds rate should ________
A) decrease by 2.5 percentage points B) decrease by 5 percentage points C) increase by 5 percentage point D) increase by 2.5 percentage points
The government can continuously issue new bonds to pay the interest on its outstanding bonds so long as
A) the real GDP growth rate exceeds the real interest rate. B) the real interest rate exceeds the real GDP growth rate. C) the real interest rate exceeds the nominal interest rate. D) the nominal interest rate exceeds the cost of borrowing.