The Simple Macro Model That Is Considered in Chapters 21

question 110

Multiple Choice

The simple macro model that is considered in Chapters 21 and 22 of the textbook is characterized by

• A) a given (constant) price level, and equilibrium national income determined by demand and supply.
• B) an endogenous price level, and national income that is solely demand determined.
• C) a given (constant) price level, and national income that is solely demand determined.
• D) an endogenous price level, and equilibrium national income determined by demand and supply.
• E) an open economy with an endogenous exchange rate.

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Definitions:

Higher Taxes

Increased rates or amounts of taxes imposed by governments on individuals, corporations, or transactions.

Inelastic

Inelastic refers to a situation in which the quantity demanded or supplied of a good or service is relatively unresponsive to price changes.

Quantity Demanded

The total amount of a good or service that consumers are willing to purchase at a specific price level, at a given point in time.

Elasticity Coefficient

A numeric value that measures the responsiveness of the quantity demanded or supplied of a good to a change in one of its determinants, such as price.