A Firm with a Highly Elastic Demand for Its Products

question 74

Multiple Choice

A firm with a highly elastic demand for its products

• A)will be unable to pass increased costs following unfavorable changes in the exchange rate without significantly lowering the quantity sold.
• B)will be able to raise prices following unfavorable changes in the exchange rate without significantly lowering the quantity sold.
• C)can easily pass increased costs on to consumers.
• D)will sell about the same amount of product regardless of price.

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Definitions:

Federal Receipts

Revenues collected by the federal government, primarily through taxes, but also including other sources such as customs duties and earnings from the Federal Reserve's operations.

Recession

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Outlays

Expenses or expenditures made by a government, organization, or individual.

Stabilization Policies

Government strategies aimed at reducing fluctuations in the economy through monetary and fiscal policy measures to achieve low inflation, reduced unemployment, and sustainable growth.