The Absolute Price Elasticity of Demand for a Product for Which

question 236

Multiple Choice

The absolute price elasticity of demand for a product for which annual expenditures make up a very small share of a typical consumer's budget is probably

• A) less than 1.
• B) equal to 1.
• C) greater than 1.
• D) infinity.

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Definitions:

Quantitative Easing

A monetary policy where a central bank buys securities in the open market to increase the money supply and encourage lending and investment.

Reserve Requirement

A regulation set by central banks that determines the minimum amount of reserves that banks must hold against deposits.

Gross National Income

The total domestic and foreign output claimed by residents of a country, consisting of GDP plus factor incomes earned by foreign residents, minus income earned in the domestic economy by nonresidents.

Net National Income

The total income of a nation after adding all payments from abroad and subtracting all payments to abroad, including depreciation.