Given the budget line in the figure above, the combination of chips that is NOT affordable is

If the income elasticity of demand for a good is 2, then when income rises 10 percent, the quantity demanded

A) increases 2 percent. B) increases 20 percent. C) decreases 2 percent. D) decreases 20 percent. E) increases 12 percent.

Suppose investment spending is not very sensitive to the interest rate. Given this information, we know that

A) the IS curve should be relatively flat. B) the IS curve should be relatively steep. C) the LM curve should be relatively flat. D) the LM curve should be relatively steep. E) neither the IS nor the LM curve will be affected.