The Figure Given Below Shows the Demand Curves for Five

question 52

Multiple Choice

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1

-If a product has an inelastic demand, then:

• A)there is probably a long time period under consideration.
• B)as price increases, total revenue to producers decreases.
• C)an increase in the price will decrease total consumer expenditures.
• D)there are probably many complements for the good.
• E)there are probably few substitutes for the good.

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Definitions:

Aggregate Demand Curve

A graphical representation showing the relationship between the total demand for all goods and services in an economy and the overall price level.

Expansionary Gap

A situation where the actual level of output in an economy exceeds the potential output level, usually characterized by high demand and inflationary pressures.

Government Purchases

Expenditures made by the government for goods and services that directly satisfy public consumption or are used in the production of other goods and services.

Stagflation

An economic condition characterized by slow economic growth, high unemployment, and high inflation, occurring simultaneously.