​Figure 53

question 11

Multiple Choice

​Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market.
-If a 1 percent change in the price of a good causes a 1 percent change in the quantity demanded of that good, then the demand is said to be:

• A)perfectly elastic.
• B)income elastic.
• C)unit-elastic.
• D)inelastic.
• E)perfectly inelastic.

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Definitions:

Semi-annually

Occurring twice a year.

Effective Annual Yield

Annualized interest rate on a security computed using compound interest techniques.

Yield Curve

A graph that shows the relationship between the interest rates and the maturity dates of debt securities issued by the same issuer.

Liquidity Premiums

Additional yield that investors require to hold securities with lower liquidity, compensating them for the higher cost and difficulty of trading such securities.