What supply and what demand approaches have been used to reduce surpluses of farm commodities?
What will be an ideal response?
On the supply side, one policy has been an acreage allotment program that sets aside land from production. In this program, farmers agree to limit planting in exchange for the supported prices. These programs only partially work because farmers set aside their worst land and keep their best land in production, so there is not a proportionate decrease in supply from the amount of land “retired.” On the demand side, new uses for agricultural products have increased the demand for them through such practices as the production of gasohol. Demand has also been bolstered by increasing domestic and foreign demand through programs like food stamps for low-income families and the Food for Peace program that enable less developed countries to buy surplus farm products from the U.S.
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Which of the following would increase GNP in the United States?
A) an increase in the production of Japanese-owned Toyota cars in the U.S. B) an increase in the production of Japanese-owned Toyota cars in Mexico C) an increase in the production of Mexican-owned Grupo Minsa corn in the U.S. D) an increase in the production of U.S.-owned General Motors cars made in Mexico
Which of the following would cause aggregate demand to decrease?
A) The government increases taxes on both business and personal income. B) A drop in the foreign exchange value of the dollar C) The Fed increases the amount of money in circulation. D) Businesses and households believe that the economy is headed for good times, so they begin to feel increased security about their jobs.