What are the three cases for the price elasticity of demand? Briefly define each
What will be an ideal response?
Demand can be elastic, inelastic, or unit elastic. Elastic demand occurs when the percentage change in quantity demanded exceeds the percentage change in price. Inelastic demand occurs when the percentage change in quantity demanded is less than the percentage change in price. Unit elasticity occurs when the percentage change in price equals the percentage change in demand.
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A country initially has an equilibrium real interest rate of 4 percent and an equilibrium quantity of investment of $2 trillion. The government's budget deficit then increases. According to the crowding-out effect, the
A) demand for loanable funds curve shifts rightward, the real interest rate rises, and investment decreases. B) supply of loanable funds curve shifts rightward, the real interest rate rises, and investment increases. C) supply of loanable funds curve shifts leftward, the real interest rate falls, and investment decreases. D) demand for loanable funds curve shifts leftward, the real interest rate falls, and investment increases. E) demand for loanable funds curve shifts rightward, the real interest rate falls, and investment increases.
How would each of the following events affect the level of employment and the real wage rate? Explain which curves in the labor market diagram would be affected and show your work
(a) The stock market falls sharply. (b) A war destroys a substantial amount of a country's physical capital. (c) A new law reduces immigration of workers into the country.
A point on the production possibilities curve represents a combination of goods that is
a. inefficient. b. efficient. c. unattainable. d. attainable.
The frictional unemployment rate is 2.5 percent, the structural unemployment rate is 3.1 percent, and the economy's current unemployment rate is 5.6 percent. The economy is in
A) an inflationary gap producing more than Natural Real GDP. B) a recessionary gap producing more than Natural Real GDP. C) an inflationary gap producing Natural Real GDP. D) a recessionary gap producing less than Natural Real GDP. E) long-run equilibrium.