In a Two-Dimensional Graph Showing the Relationship Between Income and Consumption

question 47

Essay

In a two-dimensional graph showing the relationship between income and consumption in the economy, what is shown on the vertical axis and what is shown on the horizontal axis?

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Definitions:

TWX Call Option

An option contract that gives the holder the right, but not the obligation, to buy Time Warner Inc. (TWX) stock at a specified price within a certain time period.

Strike Price

The set price at which an option can be bought or sold when it is exercised.

Intrinsic Value

The actual, fundamental value of an asset, determined through analysis without reference to its market value.

Warrant

A security that gives the holder the right to purchase shares of stock at a fixed price over a given period of time.