Using cross-sectional data from the two Housing Assistance Supply Experiment (HASE) sites—Brown County, Wisconsin, and St
Joseph County, Indiana—John Mulford of Rand Research estimates the long-run "permanent" income elasticity of housing expenditures to be 0.45 for owners. Using this information, what is likely to happen to housing expenditures if the government increases income transfers to recipients in HASE sites?
A) Housing expenditures will decrease by a small amount.
B) Housing expenditures will increase significantly.
C) Housing expenditures in HASE sites will fall significantly as recipients move out of these areas to higher-income areas.
D) Housing expenditures will increase, but not significantly.
D
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Today, primary commodities
A) are not a major export for most of Latin America. B) are highly valued relative to manufactured goods. C) have benefited from increased demand from growing world economies. D) are not subject to business cycles.