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Answer:
Inelastic; 5%; fall; 10%; rise
Explanation:
Price elasticity of demand is always negative for normal goods. This happens because of the law of demand, that demand falls with rise in price.
Price elasticity between 0 and 1 shows inelastic demand.
This means that there is smaller change in demand due to a greater change in price level.
Price elasticity of demand is -0.5.
If the price falls by 10%, demand will increase by 5%.
The revenue will fall, because of greater fall in price.
If the price increases by 20%, demand will fall by 10%.
Revenue will increase because of greater increase in price.
Answer:
left by 30 billons
then right by 40 billons
Explanation:
the aggregate demand curve will move to the left as the consumption of the economy will fall as the household are less wealthy than before.
Then, as the interest rate fall the aggregate demand curve will move to the right as the investing increase as now more projects are profitable.
<em>Calculations:</em>
<em />
5 billon for every point of wealth:
6 points x 5 billon = 30 billons
20 billion of inventing per 1% of interest rate decrease
2 points x 20 billions = 40 billons