If the Income Elasticity of a Good Is Negative,then

question 47

Multiple Choice

If the income elasticity of a good is negative,then

• A) the good must be a Giffen good.
• B) the substitution and income effects must be moving in the same direction.
• C) the Engel curve for this good must be downward sloping.
• D) the law of demand must be satisfied for this good.

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Definitions:

Section 1231 Property

Refers to a type of property, both tangible and depreciable, used in a business and held for more than one year, which qualifies for tax treatment that combines aspects of capital gains and ordinary income tax rates.

Trade or Business

Activity conducted for the purpose of earning income or profit, involving regular and continuous activities in a particular field.

Deemed Worthless

A term referring to assets that have become valueless and are recognized as a loss for tax purposes.

Long-Term Loss

A loss realized from the sale of an asset held for more than one year, which can offset long-term capital gains.