When Total Demand Is Not Much Affected by Price Changes

question 3

Multiple Choice

When total demand is not much affected by price changes, this is known as:

• A) J- curve demand.
• B) non- fluctuating demand.
• C) derived demand.
• D) price inelasticity.
• E) price elasticity.

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Definitions:

Government Expenditure

The total amount of money spent by the government on various services and investments.

Discretionary Fiscal Policy

Government policy that involves altering government spending and taxation to influence the economy, based on current economic conditions.

Automatic Stabilizers

Structural features of government spending and taxation that reduce fluctuations in disposable income, and thus consumption, over the business cycle.

Net Taxes

The total taxes paid to the government after subtracting transfers and government spending directly beneficial to the taxpayer, such as social security or unemployment benefits.