Limited commitment means
A) one cannot credibly promise something.
B) one saves only part of what is optimal.
C) only some households are allowed to save.
D) there is rationing on the credit market.
A
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A product would be more demand price elastic:
a. the shorter the time the consumer has to adjust to price changes. b. the lower the price of the good. c. the fewer the number of good substitutes. d. the less the essential nature of the good. e. if the supply is more price elastic.
The reason the short-run macro model suggests that the economy can operate either above or below its potential while in the long-run classical model the economy operates automatically at full employment is that
a. the short-run macro model is flawed and inaccurate b. the classical model is flawed and inaccurate c. the two models measure completely different aspects of the economy d. in the short run, spending affects output, but not in the long run e. in the short run the role of government in helping the economy return to equilibrium is not considered