When Demand Is Elastic

question 44

Multiple Choice

When demand is elastic

• A) changes in price and changes in total revenue move in the same direction.
• B) there is no relationship between changes in price and changes in total revenue.
• C) changes in price and changes in total revenue move in opposite directions.
• D) for any change in price, total revenue will not change.

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Definitions:

Government Budget Deficit

The financial situation where a government's expenditures exceed its revenues within a specific period, often leading to borrowing.

Government Budget Surplus

A financial situation in which a government's revenues exceed its expenditures during a specific period of time.

Real Interest Rates

Interest rates adjusted for inflation, showing the real cost of borrowing or the real yield on savings.

Real Exchange Rate

An adjusted exchange rate between two currencies that reflects the purchasing power of the two currencies; it factors in the relative prices of a standard set of goods and services in each country.