Which type of goods is most adversely affected by recessions?
A) Goods for which the income elasticity coefficient is relatively low or negative.
B) Goods for which the income elasticity coefficient is relatively high and positive.
C) Goods for which the cross elasticity coefficient is positive.
D) Goods for which the cross elasticity coefficient is negative.

Question

Quizplus · Accepted Answer

Goods with a high and positive income elasticity are luxury goods, which see a significant drop in demand during recessions as consumers cut back on non-essential spending.

Which Type of Goods Is Most Adversely Affected by Recessions