If the demand is perfectly elastic, what would happen to the ...

[Caiter2013]

If the demand is perfectly elastic, what would happen to the quantity demanded if there is a tiny increase in price?
 a. quantity demanded will increase proportionately
 b. quantity demanded will fall to zero
 c. quantity demanded will register a disproportionately high increase
  d. quantity demanded will decrease proportionately

Question 2

Which of the following would constitute contractionary monetary policy by the Fed?
 a. An increase in income tax rates, a cut in government spending, and an elimination of the investment tax credit
  b. Open market sales of government securities, an increase in the discount rate, and an increase in reserve requirements
  c. An increase in tariffs on imported goods and a decrease in foreign aid
 d. Open market purchases of government securities, a cut in the discount rate, and an increase in reserve requirements

[LVPMS]

Answer to Question 1

b

Answer to Question 2

b

[Caiter2013]

Excellent

[okolip]

TYSM