Answer:
b. a 20% decrease in the price of foreign travel will increase the quantity demanded by 80%.
Explanation:
A price elascitiy of 4 means demand is elastic. Price elasticity greater than 1 indicates demand is elastic.
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price.
Elastic demand is when a change in price leads to a change in quantity demanded.
If price increases and demand is price elastic, the quantity demanded falls.
If price falls and demand is price elastic, the quantity demanded rises.
If price elasticity is 4, 20% decrease in the price of foreign travel will increase the quantity demanded by 80%.
Inelastic demand is when price elasticitiy is less than 1.
I hope my answer helps you
I’m pretty sure the answer to your question is a
Answer:
See below.
Explanation:
To compute the change in money supply, we first calculate the credit multiplier,
Credit multiplier is calculated as,
Multiplier = 1 / reserve ratio
When the Bank of Tazi loans 10 million to bank while their reserve requirements stay the same, this additional 10 million will be loaned out and the total change in money supply would be
= 10 million * Multiplier
For example if the reserve ratio was 4% then the multiplier = 1 /0.04 = 25
Then the total change in money supply would be 10 * 25 = 250 million.
Hope that helps.
