A Price Elastic Demand Exists If a 10 Percent Change

question 52

Multiple Choice

A price elastic demand exists if a 10 percent change in the price of a good results in a percentage change (in absolute value terms) in quantity demanded that is:

• A) less than 0.
• B) greater than 0 but less than 10.
• C) equal to 10.
• D) greater than 10.

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Definitions:

Tight Money Policy

A monetary policy strategy used by central banks to reduce the money supply and increase interest rates to control inflation.

Net Exports

The difference between a country's total value of exports and total value of imports. Positive net exports indicate a trade surplus, while negative net exports indicate a trade deficit.

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the total amount loaned.

Federal Open Market Committee

The branch of the Federal Reserve Board that determines the direction of monetary policy, specifically by directing open market operations.