If the Income Elasticity of Money Demand Is 3/4 and Income

question 70

Multiple Choice

If the income elasticity of money demand is 3/4 and income increases 8%,by about how much does the price level change?

• A)falls 6%
• B)unchanged
• C)rises 6%
• D)rises 8%

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Definitions:

Fair-Value Allocations

The process of assigning fair values to different assets and liabilities when a company is acquired, as part of the purchase price allocation.

Net Income

The net income a business earns following the deduction of all costs and taxes from its gross revenue.

Dividends

Profit payouts by a corporation to its shareholders, usually as a method of distributing earnings.

Initial Value Method

An accounting approach for investments where the investment is recorded at its original cost without subsequent adjustments for changes in market value.