If the Income Elasticity of Demand for a Good Is

question 88

Multiple Choice

If the income elasticity of demand for a good is - 3.4,a 25% increase in income results in

• A)a 4% increase in quantity demanded.
• B)a 0.85% increase in quantity demanded.
• C)an 8.5% decrease in quantity demanded.
• D)an 85% decrease in the quantity demanded.
• E)There is not enough information to answer this question.

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Definitions:

Check Collection

The process by which banks handle the clearing of checks, ensuring the transfer of funds from the check writer's account to the recipient's account.

Banking System

The network of institutions, laws, regulations, and practices that deliver financial services including deposit, loan, and payment services.

Drawer

The party that writes and signs a cheque, instructing a bank to pay a specific amount of money to the bearer or a named party.

Drawee Bank

The financial institution upon which a check is drawn and is responsible for paying the amount indicated when properly presented.