What can income elasticity of demand tell us about the nature of a good?
What will be an ideal response?
The income elasticity of demand for a good equals the percentage change in quantity demanded of a good due to a percentage change in the consumer's income. Using income elasticity, products can be classified as normal goods or inferior goods. Goods with an income elasticity above 1 are called luxury goods. An income elasticity which is above 0 but less than 1 indicates that the good is normal. Inferior goods will have a negative income elasticity.
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If a bank receives an additional deposit of $50,000 and the desired reserve ratio is 20 percent, what is the amount of new loans the bank can make?
What will be an ideal response?
A proportional income tax is a tax that taxes income at a constant rate
Indicate whether the statement is true or false
In a closed economy, which of the following equations reflects investment? (Y = GDP, C = Consumption, G = Government purchases, T = Taxes, and TR = Transfers)
A) Y - T + TR B) Y - C - T C) C + G -T D) Y - C - G
Assume Congress decides that oil companies are making too much profit and decides to increase the tax on oil companies for each gallon of gasoline produced. This would
A) guarantee a decrease in profits. B) guarantee an increase in profits. C) guarantee an increase in tax revenues. D) None of the above.