Recall the Application About the Price of Vanilla Beans to Answer

question 48

Multiple Choice

Recall the Application about the price of vanilla beans to answer the following question(s) . In 2000, a
cyclone destroyed the vanilla bean crop in Madagascar, the worldʹs leading vanilla producer, and the
replacement vines took 3 to 5 years to produce usable beans. By 2006, the replanted vines in Madagascar
started to produce vanilla beans, but by that time several other countries had also entered the vanilla
market. The price of vanilla beans went from $50 per kilo to $500 per kilo from 2000 to 2003, and from
$500 per kilo to $25 per kilo from 2003 to 2006.
-According to this Application, from 2000 to 2003, the price of vanilla beans increased because the _______ curve shifted _______.

• A)demand; up and to the right
• B)demand; down and to the left
• C)supply; down and to the right
• D)supply; up and to the left

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Definitions:

Loanable Funds

The supply of money available for borrowing in the financial market, determined by savings and demand for borrowing.

Loanable Funds

The money available for borrowing, the supply of which is influenced by savings and demand for investment.

Real Interest Rate

The interest rate adjusted for inflation, representing the real cost of borrowing or the real yield on savings.

Real Exchange Rate

The rate at which the goods and services of one country can be exchanged for those of another, adjusted for inflation, reflecting the purchasing power of its currency internationally.