"The Weather Induced Failure of the 1999 Grain Crop Leads

question 62

Multiple Choice

"The weather induced failure of the 1999 grain crop leads the Russia to quadruple grain imports from the United States" Assuming that the U.S. grain exports come from government warehouses,

• A) net investment in the United States would increase dramatically according to the flexible accelerator theory.
• B) net investment in the United States would decrease dramatically according to the flexible accelerator theory.
• C) there would be no change in net investment since the Russian demand is temporary.
• D) net investment would increase slowly since this is agriculture.

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Definitions:

Borrowing Cost

Borrowing cost is the total expense, including interest and fees, associated with obtaining funds through borrowing.

Credit Extension

The process of providing new or additional credit to borrowers.

Bad-Debt Losses

Financial losses incurred when a debtor fails to make payment on a loan, leading to a write-off by the creditor.

Collection Costs

Expenses incurred in the process of recovering debts or payments from debtors.