-The Data in the Table Above Shows the Relationship Between

question 7

Multiple Choice

-The data in the table above shows the relationship between the Joneses' total consumption and total household income. Based on these data, total consumption varies

• A) negatively with their income.
• B) inversely with their total household income.
• C) independently of their total household income.
• D) directly with their total household income.

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Definitions:

Coupon Bond

A type of bond that pays the holder a fixed interest rate (the coupon) at regular intervals until the bond matures, when the principal amount is repaid.

Zero-Coupon Bond

A debt security that doesn't pay interest (a coupon) but is traded at a deep discount, offering profit at maturity when the bond is redeemed for its full face value.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates.

Yield To Maturity

The total return anticipated on a bond if it is held until the date it matures, including all payments of principal and interest.