Suppose the value of income elasticity of demand for a private college education is equal to 1.5 . This means that:
a. every $1 increase in income provides an incentive for a $1.50 increase in expenditures on private college education.
b. every $1.50 increase in income provides an incentive for a $1 increase in expenditures on private college education.
c. a 10 percent increase in income causes a 15 percent increase in the quantity of private college education purchased.
d. a 15 percent increase in income causes a 10 percent increase in the quantity of private college education purchased.
e. a 10 percent decrease in private college tuition will have a large enough income effect to increase spending on private college education by 15 percent.
c
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A change in consumption spending caused by income changes is ________ change in spending, and a change in government spending that occurs to improve roads and bridges is ________ change in spending
A) an autonomous; an induced B) an induced; an autonomous C) a contractionary; an expansionary D) an expansionary; a contractionary
If a country's production possibilities curve gets more bowed out over time, it is an indication that
A) technological change has taken place. B) society is learning to use its resources more efficiently. C) the quantity of labor and capital have increased. D) resources have become more highly specialized.
The interest-rate effect is the impact on real GDP caused by the ____ relationship between the price level and the interest rate
a. direct b. independent c. linear d. inverse
The fictional country of Alpetra increases the income tax rate so that tax revenues increase by $30 million. In response, consumption falls by $8 million. If GDP and government spending remains the same and Alpetra is a closed economy, what is the change in investment?
a. Investment increases by $8 million. b. Investment decreases by $8 million. c. Investment increases by $38 million. d. Investment decreases by $22 million.