Suppose the 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 demand for a private college education
d. a 15 percent increase in income causes a 10 percent increase in the demand for a private college education
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 commercial bank's reserves are
A) bonds issued by the U.S. government that are very safe. B) the provision of funds to businesses and individuals. C) currency in its vault plus the balance on its reserve account at a Federal Reserve Bank. D) savings and time deposits. E) its loans.
What, according to the textbook, accounts for the federal budget surplus in the late 1990s?
A) A move toward virtue on Capital Hill B) Strong economic growth during that period C) Huge increases in tax rates D) A successful beggar-thy-neighbor strategy