If a Product Has Only a Few Acceptable Substitutes, Demand

question 14

Multiple Choice

If a product has only a few acceptable substitutes, demand for the product is most likely to be

• A) very inelastic.
• B) inelastic.
• C) elastic.
• D) very elastic.

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Definitions:

Net Exports

The value of a country's total exports minus its total imports, representing the net trade balance of goods and services.

Interest Rates

The share of a loan levied as interest on the borrower, typically indicated as an annual percentage of the unpaid loan amount.

Twin Deficits

Refers to the situation where a country is running both a fiscal deficit (government spending exceeds revenue) and a current account deficit (imports exceed exports).

Budget Deficit

The condition when a government spends more than its income, requiring it to borrow money or accumulate debt to cover the gap.