A Problem for Developing Countries Is That the Prices of Primary

question 39

Multiple Choice

A problem for developing countries is that the prices of primary products fluctuate more widely than the prices of finished goods because:

• A)crop supply changes very little despite the weather.
• B)crop supply fluctuates with the weather.
• C)weather never varies.
• D)the demand for primary products fluctuates as new diets are developed.
• E)the demand for primary products fluctuates with the weather.

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Definitions:

Stabilization Policies

Economic strategies and actions taken by governments or monetary authorities to stabilize the economy, aiming to reduce fluctuations in the business cycle.

Milton Friedman

An American economist and Nobel Prize laureate known for his research in consumption analysis, monetary history and theory, and his advocacy of free-market capitalism.

Rational Expectations

The hypothesis that individuals form forecasts about the future based on all available information in an unbiased and consistent manner.

Self-Correction Mechanism

The market's ability to adjust back to equilibrium without intervention, often used in the context of economic cycles.