The Income Elasticity of Demand of an Inferior Good

question 247

Multiple Choice

The income elasticity of demand of an inferior good:

• A) is less than 0.
• B) is equal to 0.
• C) is greater than 0.
• D) could be any one of the above.

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Definitions:

Deep Depression

An extended period of significant decline in the economy, characterized by high unemployment, sharp decreases in output and trade, and widespread poverty.

Capacity Utilization Rate

A measure of how well an economy or a firm is using its productive capacity to manufacture goods or services.

Unemployment Rate

A gauge of the share of individuals in the labor pool who are not employed but are actively seeking a job.

Economy Operated

Refers to the manner in which a nation’s economic systems and policies are managed and function to produce goods and services.