Suppose that the income elasticity of demand for frozen dinners is negative. Other things being equal, which of the following statements is incorrect?
A. Frozen dinners are an inferior good.
B. The quantity demanded of frozen dinners increases as a consumer's income declines.
C. There exists a negative relationship between income and the demand for frozen dinners.
D. The share of income spent on frozen dinners must decrease as a consumer's income decreases.
Answer: D
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What will be an ideal response?
Other things the same, when the price level rises, interest rates
a. rise, so firms increase investment. b. rise, so firms decrease investment. c. fall, so firms increase investment. d. fall, so firms decrease investment.
Which of the following statements is false?
A) A call option will sell for a fraction of the cost of the stock. B) A futures contract can be written for a commodity (such as wheat), or for a currency. C) A futures contract gives the owner the right, but not the obligation, to buy or sell a commodity at a specified price on a given future date. D) The specified price at which an option gives the owner the right to buy a stock at is called the stick price.
The federal funds rate is the rate that the Fed controls most closely through
A. its open market operations. B. printing money. C. setting the reserve requirement. D. setting margin requirements.