Indian Economy Questions

If the percent change in quantity demanded is less than the percent change in price, economists label the demand for the good as inelastic.

A good that is inelastic does not have very stretchy demand. In economic terms, the quantity demanded does not change a lot when the price changes.

So, if the price of a good increases by 10 percent and the quantity demanded decreases by only 5 percent or less than 10, that good is said to have inelastic demand.

Hence, in this case, consumers are not considered very sensitive, or responsive, to a change in the price of that good.

GDP tends to overstate economic well-being because it takes into account social costs related to the consumption of products with adverse health effects

Economic resources include land, labour, capital and entrepreneurship. 

Entrepreneurship is also considered an economic resource because individuals are responsible for creating businesses and moving economic resources in the business environment.

These economic resources are also called as Factors of production.

In the aggregate expenditures model, it is assumed that investment does not change when real GDP changes.

• The aggregate expenditure is the sum of all the expenditures undertaken in the economy by the factors during a specific time period.

• The aggregate expenditure determines the total amount that firms and households plan to spend on goods and services at each level of income.