The Demand Function for Drangles Is Given by D(p)= (P

question 8

Multiple Choice

the demand function for drangles is given by D(p) = (p + 1) ^-2.If the price of drangles is $20, then the price elasticity of demand is

• A)-0.95.
• B)-7.62.
• C)-5.71.
• D)-3.81.
• E)-1.90.

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Definitions:

Foreign Indebtedness

The total amount of debt a country owes to foreign creditors.

Fixed Exchange Rates

A currency system where the value of a currency is set at a predetermined rate relative to other currencies, instead of fluctuating in the open market.

Exchange Controls

Restrictions that a government may impose over the quantity of foreign currency demand by its citizens and firms and over the rate of exchange as a way to limit the nation’s quantity of outpayments relative to its quantity of inpayments (in order to eliminate a payments deficit).

Flexible Exchange Rates

Foreign exchange system where the value of currencies is determined by supply and demand in the forex market, without direct government intervention.