Critical Reasoning

If there is a drought that ruins the wheat crop of a large wheat exporting county resulting in higher international wheat prices, domestic wheat prices in free-trading countries such as England will increase as well, regardless of how much wheat, if any, that country imports.

If the statement concerning wheat supply is true, which of the following policies in a free-market nation is most likely to reduce the long-term economic impact on that nation of steep and unexpected increases in international wheat prices?

A) Maintaining a large wheat reserve sufficient to meet demand for several months.

(B) Increasing domestic production of wheat for the following year.

(C) Contracting with new wheat exporting nations.

(D) Increasing the number of wheat imports.

(E) Reducing domestic consumption of wheat by switching to alternative grains where possible.
i think both E and A are good... whats your answer and why did you choose it?

IMO E as the arguments states that the domestic wheat price in free-trading country will increase regardless of how much wheat that country imports. This suggests that to reduce the long term economic impact on that nation, switching to alternative grains is the best solution.

IMO E

A says 'Maintaining a large wheat reserve sufficient to meet demand for several months.' It is unclear as to how many months we are talking about. Also, what if after several months, when the reserve wheat has been exhausted, the international prices are still high? Then that nation might still have to import wheat. This option fails to address the 'long-term' aspectt of the question.

Regards,
Dhruv

IMO E, long term economic impact can be reduced only be E!

OA please!

will go with E

I'm sure OA is E,

This is a very popular question and so many people created the replica (by changing just words) of this concept.

Op A is wrong because:

"reduce the long-term economic impact on that nation of steep and unexpected increases in international wheat prices"

Op A: Maintaining a large wheat reserve sufficient to meet demand for several months.


Several months may or may not be equal to long-term