An Individual with No Investment Opportunities Has Income of $15,000

question 19

Multiple Choice

An individual with no investment opportunities has income of $15,000 in period 0 and income of $10,000 in period 1. If the interest rate is 7%, which of the following points is on the individual's consumption possibility line?

• A) $3,000 in period 0 and $21,215 in period 1.
• B) $4,000 in period 0 and $21,116 in period 1.
• C) $10,000 in period 0 and $15,350 in period 1.
• D) $16,000 in period 0 and $9,000 in period.
• E) $18,800 in period 0 and $6,200 in period 1.

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Definitions:

Stock Index

A measurement of a section of the stock market, usually representing the performance of certain stocks or industries.

Soybean Future

A standardized contract for the future sale or purchase of soybeans, traded on a commodities exchange.

Wheat Spot Price

The current market price at which wheat can be bought or sold for immediate delivery.

Profit

The financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.