The Cost of Consumption Has Two Components

question 101

Multiple Choice

The cost of consumption has two components:

• A)the substitution effect and the income effect
• B)the law of demand and the law of diminishing marginal utility
• C)the price effect and the income effect
• D)the money price and the time price
• E)saving and taxes

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Definitions:

Store of Value

An asset that can be saved, retrieved, and exchanged at a later time, and is predictably useful when retrieved.

Liquidated

The process of converting assets into cash or other forms of payment, often used in bankruptcy proceedings.

Interest Income

Earnings received from deposit accounts or investments such as bonds, loans where one lends money to someone else in exchange for a return of interest.

Currency Notes

Paper money issued by a country's central bank or government as legal tender for transactions.