The Demand for a Good Is Inelastic

question 130

Multiple Choice

The demand for a good is inelastic. Which of the following would be the most likely explanation for this?

• A) The good is narrowly defined.
• B) The good is broadly defined.
• C) The good costs a large portion of one's total income.
• D) The time interval considered is long.

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Definitions:

Recessionary Gap

The situation where an economy's actual output is less than its potential output due to economic downturn or recession.

Fiscal Policy

A method used by governments to influence a country's economic activity through taxation and spending decisions aimed at achieving economic goals.

Federal Budget Deficit

The shortfall when a government's expenditures exceed its revenues within a fiscal year.

Net Taxes

The difference between the total taxes paid to the government and the total transfers received, reflecting the actual fiscal contribution of an entity.