g a recession, governments may have to sometimes step in and help businesses with:             None of the suggested options             Positive and high income elasticity coefficients             Negative income elasticity coefficients             Positive but low income elasticity coefficients

Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter6: Demand And Elasticity
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Question 24

    During a recession, governments may have to sometimes step in and help businesses with:
            None of the suggested options
            Positive and high income elasticity coefficients
            Negative income elasticity coefficients
            Positive but low income elasticity coefficients

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Compare the impact of a recession that reduces consumer income by 10 percent on the 
consumption of durable goods and house rentals. Suppose that the income elasticity of 
demand for durable goods is 1.5 and the income elasticity of demand for house rentals is 0.3. 
Based on your response, make a policy argument to support through government funding 
either businesses or house rentals.

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