If the Cross Price Elasticity of Demand Equals -1,then the Two

question 30

Multiple Choice

If the cross price elasticity of demand equals -1,then the two goods are

• A) both normal.
• B) both inferior.
• C) complements to one another.
• D) substitutes to one another.

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Definitions:

Cost of Borrowing

The interest and any other charges incurred by borrowing money.

Open-Market Purchases

The buying of government bonds by a central bank to inject money into the economy and expand economic activity.

Investment

The allocation of resources, usually money, in the expectation of generating an income or profit.

Real GDP

The measure of a country's economic output adjusted for price changes (inflation or deflation), representing the value of all goods and services produced over a specific period at constant prices.