If the cross elasticity of demand for potato chips and pretzels equals 1.5,
A. potato chips and pretzels must both be luxury goods.
B. either potato chips or pretzels must be a luxury good, and both may be luxury goods.
C. potato chips and pretzels must be substitutes.
D. potato chips and pretzels must be complements.
Answer: C
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A correlation between two variables implies that:
A) there is a cause-effect relationship between the two variables. B) it is impossible to measure one variable without measuring the other. C) there is a mutual relationship between both the variables. D) when one variable changes, the other variable always changes by exactly the same amount.
The velocity of circulation is
A) the relationship between income and spending. B) the relationship between increases in income and investment. C) the ratio of currency to demand deposits. D) the average number of times per year a dollar is spent on goods and services in GDP.