Which of the Following Is True for a Consumption Commodity

question 14

Multiple Choice

Which of the following is true for a consumption commodity?

• A) There is no limit to how high or low the futures price can be, except that the futures price cannot be negative
• B) There is a lower limit to the futures price but no upper limit
• C) There is an upper limit to the futures price but no lower limit, except that the futures price cannot be negative
• D) The futures price can be determined with reasonable accuracy from the spot price and interest rates

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Definitions:

Consumer Spending

The total amount of money spent by households and individuals in an economy on goods and services, an important indicator of economic health.

Consumption Expenditures

The total amount of money spent by households and individuals on goods and services for personal use.

Circular Flow Diagram

A visual model of the economy that shows how dollars flow through markets among households and firms.

Households

Economic units that consist of all individuals who live together in one dwelling, making joint decisions about consumption and labor.