Figure 3.2.4 -To Simplify Our Consumption Models, Suppose U.S. Consumers Only Purchase

question 77

Multiple Choice

Figure 3.2.4
-To simplify our consumption models, suppose U.S. consumers only purchase food and all other goods where food is plotted along the horizontal axis of the indifference map. If the U.S. Congress passes an economic stimulus package that pays $300 to each person, how does this affect the budget line for each consumer?

• A) Makes the budget line steeper
• B) Makes the budget line flatter
• C) Parallel outward (rightward) shift
• D) Parallel inward (leftward) shift
• E) none of the above

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Definitions:

Portfolio B

This could refer to a specific investment portfolio identified by the letter "B," often as part of a series or classification of portfolios managed by an investment firm or individual.

Stock Price

The cost of purchasing a single share of a company, fluctuating based on supply and demand in the market.

Strike Price

The set price at which an option's owner has the right to purchase (for a call option) or sell (for a put option) the underlying asset.

Stock Call Option

A financial derivative that gives the buyer the right, but not the obligation, to buy a specific stock at a predetermined price within a set period.