In the case of a linear demand curve, demand becomes more price elastic as price increases
Indicate whether the statement is true or false
True . For a demand curve of the form Q = a - bp, elasticity can be written as
-b[p/(a - bp)]. As p increases, the term in square brackets increases, making the elasticity increase.
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Which of the following is true (assume the small country case)?
A) With a quota, an increase in demand leads to a higher price and more imports. B) With a tariff, an increase in demand leads to a higher price and more imports. C) With either a tariff or a quota, an increase in demand leads to a higher price and more imports. D) None of the above are true.
"Real money balances" refers to
A) the currency part of the total money supply. B) the money supply divided by the price level. C) the money supply times one minus the interest rate. D) the non-interest-earning part of the money supply.