A Perfectly Inelastic Demand

question 50

Multiple Choice

A perfectly inelastic demand:

• A)means people will not respond to any change in price.
• B)means quantity demanded will stay constant regardless of the price.
• C)is demonstrated by a perfectly vertical demand curve.
• D)All of these are true.

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Definitions:

Open Market

A venue where buyers and sellers engage in the trade of commodities, securities, and other financial instruments under defined regulations.

Reserve Ratio

The fraction of deposits that banks are required to keep on hand as reserves, determined by central banking authorities.

Deposit Expansion Multiplier

The ratio that describes the potential increase in money supply through the banking system via fractional reserve banking.

Government Bonds

Debt securities issued by a government to support government spending and obligations, typically offering a fixed rate of return over a specified period.