Explain what the slope of the income consumption curve shows about the income elasticity of demand
What will be an ideal response?
A positive slope of the income consumption curve is associated with a positive income elasticity of demand, and a negatively sloped income consumption curve is associated with a negative income elasticity of demand. The income consumption curve represents how consumption changes with an increase in income. An upward sloping income consumption curve represents an increase in consumption as income rises, as does a positive income elasticity.
You might also like to view...
The Federal Funds Committee executes the purchases and sales of government securities decisions of the Federal Reserve
a. True b. False Indicate whether the statement is true or false
When the price of a good is constant, marginal revenue is the same as
a. total revenue b. average total cost c. price d. quantity of output e. profit per unit
Which of the following central bank policies will lower the money supply?
a. Buying government securities. b. Lowering the discount rate. c. Selling foreign currency in the foreign exchange market. d. Lowering the reserve ratio. e. None of the above.
Where Y is GDP, C is consumption, I is investment, G is government spending, and there is no international trade, national saving equals:
A. Y + C + G. B. C + I + G. C. Y - C - G. D. Y - C - I.