You and Your College Roommate Eat Three Packages of Ramen

question 124

Multiple Choice

You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. You still enjoy Ramen noodles very much and buy even more, but your roommate plans to buy fewer Ramen noodles in favor of foods she prefers more. When looking at income elasticity of demand for Ramen noodles, yours would

• A)be negative, and your roommate's would be positive.
• B)be positive, and your roommate's would be negative.
• C)be zero, and your roommate's would approach infinity.
• D)approach infinity, and your roommate's would be zero.

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Definitions:

Money Supply

The overall financial resources quantity in an economy at a specified time.

Interest Rate

The percentage of a sum of money charged by a lender to a borrower for the use of money, typically expressed as an annual percentage.

Quantity of Money Demanded

The total amount of money that households and businesses in an economy want to hold at a given time, based on interest rates and economic activity.

Money Supply

The bulk sum of assets in monetary form within an economy at a particular moment.