If the Budget Constraint Is Given by M = P₁Y₁

question 46

Multiple Choice

If the budget constraint is given by M = P₁Y₁ + P₂Y₂ then:

• A) there is borrowing but no saving
• B) there is saving but no borrowing
• C) there is borrowing and saving
• D) there is neither borrowing nor saving

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Definitions:

Profit-maximizing

A strategy or approach by businesses aimed at achieving the highest possible profit from their operations.

Factor 2

In a variety of contexts, this could refer to the second variable or element in an equation, model, or experimental design that influences outcomes.

Price

The amount of money or compensation commanded by something in a market; the cost at which something is bought or sold.

Factor Price

The payment for the use of a factor of production, such as labor wages, rent for land, or interest for capital.