The income elasticity of demand for jewelry is 2. Other things equal, a 10 percent increase in consumer income will:
A. decrease the quantity of jewelry purchased by 20 percent.
B. increase the quantity of jewelry purchased by 20 percent.
C. decrease the quantity of jewelry purchased by 10 percent.
D. increase the quantity of jewelry purchased by 10 percent.
Answer: B
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If policymakers attempt to offset an adverse inflation shock with monetary ________, the resulting long-run equilibrium will be at ________ inflation rate compared to allowing the self-correcting mechanism return the economy to potential output.
A. easing; a lower B. tightening; a lower C. tightening; a higher D. easing; a higher
When the labor market is at full employment
A) real GDP equals potential GDP. B) the price level is stable. C) the price level equals the potential price level. D) the short run aggregate supply curve is horizontal.
Explain the concept of diminishing returns.
What will be an ideal response?
The variable used to measure economic growth is
A. the number of new jobs created. B. the growth in per capita real GDP. C. the growth of the money supply. D. the trade surplus.