Rational Utility Maximizing Consumers Tend To

question 56

Multiple Choice

Rational utility maximizing consumers tend to:

• A) buy the same bundle of goods regardless of the prices charged.
• B) choose the same bundle of goods regardless of their income.
• C) change their consumption choices when either prices or income changes.
• D) change their consumption choices only when both prices and income changes simultaneously.

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Definitions:

Floating Rate Bonds

Bonds that have variable interest rates, adjusting periodically in relation to an index or benchmark rate.

Interest Rates

The cost of borrowing money or the return for lending money, typically expressed as an annual percentage rate.

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturity date, including both interest payments and capital gains.

Annual Coupon

The annual interest payment made to bondholders, typically expressed as a percentage of the bond's face value.