The demand for a good is elastic. Which of the following would be the most likely explanation for this?
A. The time interval considered is long.
B. The good costs a small portion of one's total income.
C. The good is broadly defined.
D. The good is a necessity.
Answer: A
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To derive the external balance relationship under high capital mobility and floating exchange rates, an increase in government spending must be followed by
A) an increase in money stock to restore the balance of payments equilibrium. B) a decrease in money stock to restore the balance of payments equilibrium. C) a depreciation of the currency to restore the balance of payment equilibrium. D) a decrease in investment spending to restore the balance of payments equilibrium.
Before the 1970s, bankers were happy with interest-rate ceilings because those ceilings: a. reduced interest-rate competition for deposits among banks. b. guaranteed them high profits
c. guaranteed them a minimum profit. d. enabled them to expand into other lines of commerce. e. allowed them to hold corporate stock.