Studies show that the income elasticity of demand for wine is approximately five. What does this mean?
A) A 1 percent increase in income leads to a 5 percent increase in wine consumption.
B) A 1 percent decrease in the price of wine leads to a 5 percent increase in wine consumption.
C) A 5 percent increase in income leads to a 1 percent increase in wine consumption.
D) Wine is a relatively elastic good.
A
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Indicate whether the statement is true or false
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A(n) ________ is an effort to kick-start the economy by increasing government spending or lowering interest rates.
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