Does the fact that the price elasticity of demand for a good is inelastic violate the law of demand?
What will be an ideal response?
No, if the demand is inelastic, when the price falls, the quantity demanded increases, but by a smaller percentage than the percentage fall in price. Thus the negative relationship between the price and the quantity demanded remains, and the demand curve still slopes downward, which is the law of demand.
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Which of the following are included in the supply of loanable funds?
I. private saving II. government budget surplus III. international borrowing A) I, II and III B) I and III C) II and III D) I and II
If an individual is to hold lower money balances on average, she must make more frequent trips to the bank to withdraw money. This inconvenience of reducing money holding is called:
A. a menu cost. B. a shoeleather cost. C. an inflation tax. D. seigniorage.