If the Percentage of Change in Total Spending (C

question 25

Multiple Choice

If the percentage of change in total spending (C + G ) is lower than the percentage change in income, an economy has some degree of:

• A) financial autonomy.
• B) consumption smoothing.
• C) imminent recession.
• D) prosperity.

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Definitions:

Opportunity Costs

The loss of potential gain from other alternatives when one alternative is chosen; the value of the next best choice.

Financial Investment

The purchase of a financial asset (such as a stock, bond, or mutual fund) or real asset (such as a house, land, or factories) in the expectation of financial gain.

Bank Certificate

A document issued by a bank certifying the deposit of money or financial instruments with a certain value.

Budget

An estimate of income and expenditure for a set period of time.