Three years after graduating from college, you get a promotion and a 16 percent raise. Your consumption habits change accordingly. (For all the calculations below round your answer to two decimal places, and enter a "-" if your answer is negative.)
Suppose your consumption of frozen hot dogs has reduced by 88 percent. Your income elasticity of demand is . Thus, we can say that a frozen hot dog is a(n) (normal good/ inferior good/ luxury good).

-5.5%

Inferior good.

Explanation:

• Income elasticity of demand = % change in quantity demanded / % change in income

= -88% / 16℅

= - 5.5%

• From the calculation above, frozen hot dog is an inferior good. An inferior good is a good which an increase in income will lead to a reduction in quantity demanded. An inferior good as a negative income elasticity of demand and is of low quality and usually purchased as a result of its affordability by low income earners.

forbearance of student loan payments. under forbearance, your loan payments are postponed (or reduced) but interest continues to accrue during the period of forbearance. if you don't pay the interest during that period, the interest may be “capitalized,” which means it is added to your principal balance.

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