Demand Is More Elastic

question 43

Multiple Choice

Demand is more elastic

• A)in the short run than in the long run
• B)for necessities than for luxuries
• C)for food than for hamburgers
• D)for goods with many substitutes than for goods with only a few
• E)for broadly defined goods than for narrowly defined ones

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Definitions:

Real Interest Rate

The interest rate that has been adjusted for inflation, reflecting the true cost of borrowing or real yield on investment.

Inflation Rate

How quickly the average cost of goods and services goes up, resulting in a drop in the ability to purchase.

Nominal Interest Rate

The interest rate before adjustments for inflation, representing the face value of interest payments on loans or investments.

Fisher Effect

The one-for-one adjustment of the nominal interest rate to the inflation rate