In the Long Run, a Drought That Destroys Most of a Summer's

question 100

Multiple Choice

In the long run, a drought that destroys most of a summer's wheat crops would cause permanently:

• A) higher prices.
• B) lower output.
• C) lower prices.
• D) None of these are true.

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Definitions:

Economic Stabilization

Economic stabilization refers to government or central bank policies aimed at maintaining steady economic growth, minimizing unemployment, and stabilizing prices to prevent excessive inflation or deflation.

Lags

Delays between the time a policy is enacted and the time when its effects are felt in the economy.

Stagflation

An economic condition characterized by slow growth, high unemployment, and rising prices, presenting a challenge for policymakers as traditional economic tools may not effectively address the simultaneous issues.

Unemployment

The situation in which individuals who are capable of working and are actively seeking employment are unable to find a job.