Sophia Macroeconomics Unit 1 Challenge 2.docx - Sophia...

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Sophia Macroeconomics Unit 1 Challenge 2 1 — Supply and Demand When quantity supplied and quantity demanded are the same, a market is said to be in __________. equilibrium 2 — Elasticity If income elasticity is positive, but less than one, this good is considered to be a __________. normal good 3 — Surplus and Constraints If a price floor is set below the equilibrium price (P) above, which of the following will occur? Nothing, as this price floor would not be binding. 4 — Tax/Subsidy When the government pays money to encourage production, this is known as a __________. subsidy 5 — Money Supply - Price Level / Inflation The price for borrowing money is known as the __________. interest rate 6 — Unemployment/Full Employment - Frictional / Structural / Cyclical

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