Studies show that the income elasticity of demand for wine is approximately five. What does this mean?
A) A 1 percent increase in income leads to a 5 percent increase in wine consumption.
B) A 1 percent decrease in the price of wine leads to a 5 percent increase in wine consumption.
C) A 5 percent increase in income leads to a 1 percent increase in wine consumption.
D) Wine is a relatively elastic good.
A
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Which of the following will decrease the natural rate of interest?
A) An increase in taxes B) An increase in investment spending C) A decrease in inflationary expectations D) An increase in the money supply
All of the following statements are true except
A. Until 1971 the United States had run a trade surplus virtually every year of the 20th century. B. The U.S. ran relatively small trade deficits through most of the 19th century. C. The U.S. was the only industrial power to raise tariffs during the 1930s. D. World trade in the 1930s dwindled to a fraction of what it had been in the 1920s.