When disposable income is zero, consumption is also zero

A budget constraint represents the:

A) inequality in the incomes earned by various economic agents. B) aggregate income earned by all the firms in an economy. C) total money income that an agent earns in different time periods. D) goods and services an economic agent can choose given her limited income.

In the figure above, which of the following is true?

i. Governments coordinate economic activities of households and firms. ii. Governments buy goods and services in goods markets. iii. Households pay taxes directly to firms. A) i and ii B) only i C) only iii D) ii and iii E) only ii