The income elasticity of demand refers to:
A. a change in income following a change in quantity demanded.
B. the change in income required for quantity demanded to change by 1%.
C. the substitution of one good for another as income changes.
D. the percentage change in quantity demanded resulting from a 1-percent increase in income.
D. the percentage change in quantity demanded resulting from a 1-percent increase in income.
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Refer to the above figure. The firm is currently producing at Q2. The firm should
A) reduce production. B) leave production as it is. C) increase production. D) shut down.
It is impossible to create a free market system that promotes economic efficiency
Indicate whether the statement is true or false
Technically, the accelerator relates the level of an economy's investment to the change in its
a. level of national income b. economic growth rate c. ratio of saving to personal income d. ratio of investment to personal income e. rate of depreciation of capital stock
If an economy is experiencing deflation, a decrease in the price level, then the most advantageous actions would be
a. borrowing money at a fixed interest rate and buying a house. b. borrowing money at a fixed interest rate and buying land. c. keeping money in a checking account. d. keeping your wealth in gold and other precious metals.