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How do you know whether the demand for a good is price elastic or price inelastic?

If the Price Elasticity of Demand is between 0 and 1, which means that the percentage change in demand is smaller than the percentage change in price, then the demand is price inelastic.If the Price Elastici...
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Explain how the basic economic problem leads to choice?

The basic economic problem is scarcity, which is where there are not enough resources in the world to satisfy everybody's desires. This is because humans are greedy and their wants are unlimited. There is a ...
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Show how an decrease in income tax will close a deflationary gap

Initially the economy is in equilibrium where AD=SRAS and real output y1 is produced at P. A deflationary gap is when potential output is below real output so as this is the case we have a deflationary gap. ...
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How would you go about calculating inflation using CPI (consumer price index)

- The consumer price index is the official measure of inflation in the UK - 2 surveys are conducted. The first survey is the Living Costs and Food surveys which involves approx. 7000 households completing se...
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Explain why there may be a conflict between unemployment and inflation

If the unemployment in the economy is demand deficient unemployment (Keynesian unemployment), the government needs to stimulate growth in the economy and increase aggregate demand as there is a lack of deman...
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