If a 6% Decrease in Price for a Good Results

question 29

Multiple Choice

If a 6% decrease in price for a good results in a 2% increase in quantity demanded, the price elasticity of demand is

• A) 0.02.
• B) 3.
• C) 0.33.
• D) 4.

Understand how government budget deficits impact the open economy, including effects on real interest rates, domestic investment, and trade balance.

Comprehend the relationship between tax credits for investment and shifts in the demand for loanable funds and supply of dollars in the foreign-currency exchange market.

Recognize the effects of capital flight on demand for loanable funds, supply of dollars, and net capital outflows in the foreign-currency exchange market.

Analyze the impact of a government default on its debt on the country's real interest rates and currency valuation in the open-economy macroeconomic model.

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Definitions:

Hoard

A collection of items, often valuable, that is hidden or stored away by an individual or group.

Paralyzed

The loss of the ability to move (and sometimes to feel anything) in part or most of the body, typically as a result of illness, poison, or injury.

Ventilator

A machine designed to provide mechanical ventilation by moving breathable air into and out of the lungs.

Autobiography

An autobiography is a self-written account of the life of oneself, providing a personal insight into an individual's experiences.