When a household spends over 70% of its monthly income on a good, demand will be
A) elastic.
B) unit-elastic.
C) inelastic.
D) elastic, unit-elastic or inelastic depending upon supply.
Answer: A
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Counter cyclical policies ________
A) increase the intensity of economic fluctuations B) lead to hyperinflation C) smooth the rate of growth of the economy over time D) lower output below its potential level
The CPI market basket
A) weights the goods and services according to the budget of an average urban household. B) determines the best possible way of taxing the average urban household. C) determines how the spending patterns of the average urban household change from month to month. D) determines how spending patterns change from urban household to urban household. E) changes from one month to the next in order to calculate the CPI.