Suppose the value of 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 quantity of private college education purchased
d. a 15 percent increase in income causes a 10 percent increase in the quantity of private college education purchased
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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The transactions approach to measuring money includes
A) traveler's checks. B) government bonds. C) the value of shares of stock in commercial banks. D) all of these.
When aggregate expenditure is less than GDP, which of the following is true?
A) There was an unplanned increase in inventories. B) Households bought more new homes than they anticipated. C) Firms spent more on capital goods than they anticipated. D) All of the above must be true when aggregate expenditure is less than GDP.