A consumer's budget refers to the:
A) wealth she has acquired over time.
B) prices of the goods she buys.
C) amount of money she can spend on various goods and services.
D) difference between the consumer's income and expenditure.
C
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Suppose the 12-month interest rate on a U.S. Treasury bill is 16 percent, and the one-year interest rate on a comparable British Treasury bill is 6 percent. The exchange rate today is $2.00 per pound. What must be the expected exchange rate at maturity for interest rate parity to hold?
a. $1.00 = 0.50 pound b. $1.00 = 0.75 pound c. 1 pound = $2.20 d. 1 pound = $1.80 e. 1 pound = $2.50
Suppose we insert $1 in the circular flow economy. If the $1 moves around in the same direction, which answer represents a possible sequence of items purchased or rented?
a. land, labor, capital, entrepreneurship b. land, services, labor, capital c. goods, labor, services, capital d. goods, labor, capital, services e. labor, capital, labor, rent