Suppose That When Your Wealth Increases from $100,000 to $200,000

question 5

Multiple Choice

Suppose that when your wealth increases from $100,000 to $200,000 , your holdings of U.S. Treasury securities increases from $2000 to $5000. Your wealth elasticity of demand for U.S. government securities then is

• A)less than 1 and U.S. government securities are a luxury asset.
• B)greater than 1 and U.S. government securities are a necessity asset.
• C)less than 1 and U.S. government securities are a necessity asset.
• D)greater than 1 and U.S. government securities are a luxury asset.

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