Which Is True of the Two Budget Lines Drawn Below

question 15

Multiple Choice

Which is true of the two budget lines drawn below?

• A)Line a has a higher nominal income than line b
• B)Line b and line a have the same nominal income
• C)The absolute price of good Y is greater with budget line a than with budget line b
• D)The price of good X is larger with budget line a

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Definitions:

Consolidated Income Statement

A consolidated income statement presents the financial performance of a parent company and its subsidiaries as one combined entity.

Forward Exchange Contract

A financial agreement between parties to exchange currencies at a predetermined future date and rate.

Annual Interest Rate

The percentage of interest that will be earned or paid on investments or loans over a one-year period.

Foreign Currency Option

A financial contract which grants the owner the option, without being obliged, to convert funds in one currency to another at a set exchange rate on a determined date.