The Price of a Gallon of Milk Falls

question 485

Multiple Choice

The price of a gallon of milk falls. Which of the following is a possible cause?

• A) a decrease in the price of oatmeal, a complement to milk
• B) a discovery that milk cause diabetes
• C) Milk is a normal good and people's incomes rise.
• D) a drought that reduces supplies of feed grains fed to cows that produce milk

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Definitions:

Exchange-rate System

The method by which a country manages its currency in relation to other currencies and determines its exchange rate.

Flexible System

An adaptable framework or methodology that can adjust to changes in environment or operation, often seen in production, management, or scheduling.

Major Currencies

The world's most widely traded currencies, typically including the US Dollar, Euro, Japanese Yen, and British Pound among others.

Managed Floating Exchange Rate

An exchange rate that is allowed to change (float) as a result of changes in currency supply and demand but at times is altered (managed) by governments via their buying and selling of particular currencies.