You would think that if people’s income increased over time, then all industries in the economy should benefit equally, but this is not the case. Explain why and give examples
Please provide the best answer for the statement.
The explanation is based on the income elasticity of demand. Those industries in the economy for which the demand is income elastic (auto, housing, and restaurants) have experienced stronger growth other the years because the percentage change in quantity demanded is greater than the percentage change in income for these normal goods. Other industries such as agriculture have experienced slower growth in output because the demand for the products produced for most agricultural goods is income inelastic. In this case, the percentage change in quantity demanded is less than the percentage change in income.
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The association of each quantity of a variable input, like labor, to its total product is the
a. short-run production function. b. average product of labor. c. stage of production. d. expansion path.
According to real business cycle theory, recessions are caused by
A. monetary factors affecting aggregate demand. B. a decline in the supply of money. C. changes in resource availability and technological innovation. D. people choosing leisure rather than work.
The abbreviation "GDP" stands for
A) Gross Domestic Prices. B) General Domestic Prices. C) Gross Domestic Product. D) Great Domestic Prices. E) Government's Domestic Politics.
In the long run, the real interest rate is determined by
A) the nominal interest rate. B) saving supply and investment demand. C) the multiplier effect. D) the expected inflation rate. E) Fed actions.