The demand for bus rides is a downward-sloping straight line demand curve. The price elasticity of demand for bus rides ________
A) increases as the price of a bus ride falls
B) decreases as the price of a bus ride falls
C) is the same no matter what the price of a bus ride
D) decreases as the price of a bus ride rises
B
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Which of these statements correctly explains the shape of the aggregate demand curve? a. As prices fall, nominal income rises and so does the demand for real goods and services
b. Rising prices reduce people's wealth and thereby decrease spending. c. With falling prices, government decides to spend less to increase the price level. d. Businesses increase investment spending in response to higher interest rates caused by inflation. e. As prices fall, domestically produced goods become more expensive relative to foreign goods, resulting in an increase in production.
The level of real GDP in the long run is called
A) potential GDP. B) short-run GDP. C) frictional GDP. D) low-capacity GDP.