Suppose That the Value of the Long-Run Absolute Elasticity of Demand

question 162

Multiple Choice

Suppose that the value of the long-run absolute elasticity of demand for a good is 1.21. Then, we know the short-run absolute price elasticity of demand will be

• A) inelastic.
• B) greater than 1.21.
• C) elastic.
• D) less than 1.21.

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Definitions:

Securities

Financial instruments representing ownership (stocks), a debt agreement (bonds), or rights to ownership (derivatives).

Twin Deficits

The situation where a country has both a fiscal deficit (government spending exceeds revenue) and a current account deficit (imports exceed exports).

Interest Rates

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.

U.S. Trade Deficits

occur when the total value of goods and services the United States imports exceeds the value of what it exports.