A Linear Downward-Sloping Demand Curve Has Price Elasticities (In Absolute

question 150

Multiple Choice

A linear downward-sloping demand curve has price elasticities (in absolute values) that

• A)increase as price decreases.
• B)remain constant along the demand curve.
• C)decrease as price decreases.
• D)are greater than or equal to 1.

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Definitions:

Long-run Aggregate-supply Curve

Represents the total quantity of goods and services that producers in an economy are willing and able to supply at different price levels when all production inputs are variable.

Short-run Aggregate-supply Curve

A curve in macroeconomics that shows the relationship in the short run between the price level and the quantity of goods and services that firms are willing and able to supply.

Long-run Phillips Curve

The long-run Phillips Curve illustrates the relationship between inflation and unemployment when expectations of inflation are fully adapted, often showing no trade-off between inflation and unemployment in the long run.

Short-run Phillips Curve

The short-run Phillips Curve represents the inverse relationship between the rate of inflation and the unemployment rate in an economy over a short period.