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DEMAND ELASTICITY AND TOTAL EXPENDITURE: The notion that price-induced changes in total expenditure for a good (price times quantity) depends on the relative price elasticity of demand. In particular, for relatively elastic demand (1 < E < ∞) changes in price cause total expenditure to change in the opposite direction. An increase in price causes total expenditure to fall and a decrease in price causes total expenditure to rise. For relatively inelastic demand (0 < E < 1) changes in price cause total expenditure to change in the same direction. An increase in price causes total expenditure to rise and a decrease in price causes total expenditure to fall. For unit elastic demand (E =1) price changes do not cause any change in total expenditure. Total expenditure is the same whether price increases or decreases.
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MONEY Anything that is generally accepted in exchange as payment for goods and services. The emphasis is on "any" because any item or asset can serve as money so long as it is generally accepted in payment throughout an economy. While the key function of money is to act as a medium of exchange, money also functions as a store of value, standard unit of account, and standard of deferred payment
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The earliest known use of paper currency was about 1270 in China during the rule of Kubla Khan.
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"When I look back on all these worries, I remember the story of the old man who said on his deathbed that he had had a lot of trouble in his life, most of which had never happened. " -- Winston Churchill, British statesman
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IRPP
Institute for Research on Public Policy
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