If the Source of Economic Instability Is Generally Variations in Spending

question 285

Multiple Choice

If the source of economic instability is generally variations in spending, then the Fed should

• A) set money supply targets.
• B) print more money.
• C) buy gold.
• D) raise taxes.

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Definitions:

Price Elasticity

A measure that describes how the quantity demanded of a good changes in response to a change in its price.

Quantity Supplied

The quantity of a product or service that sellers are ready and capable of offering for sale at a certain price during a designated period.

Demand

The amount of a product or service that buyers are prepared and capable of buying at different price levels within a given time frame.

Inelastic Demand

Refers to a situation where the quantity demanded of a good or service changes little with a change in price.