Use the Table Below to Answer the Following Question

question 22

Multiple Choice

Use the table below to answer the following question.
Table 4.2.1

-Consider the information in Table 4.2.1. Select the best statement.

• A)The income elasticity of demand is -2.5.
• B)The income elasticity of demand is 2.5.
• C)The income elasticity of demand is -3.33.
• D)The income elasticity of demand is 3.33.
• E)We cannot calculate the income elasticity of demand because both income and price are changing at the same time.

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Definitions:

Money Stock

Represents the total quantity of money available in an economy at a specific time, including cash, coins, and balances held in checking and savings accounts.

Economic Activity

The actions that involve the production, distribution, and consumption of goods and services within an economy.

Recession

A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

Equation of Exchange

An economic identity that represents the relationship between the money supply, its velocity, the price level, and the number of transactions conducted, often formulated as MV = PQ.