According to the household nominal budget constraint, PC+ B+P• K = + wL + i(B + PK), households can use their income to:

Question

According to the household nominal budget constraint, PC+  B+P•  K =  + wL + i(B + PK), households can use their income to:

Quizplus · Accepted Answer

The household nominal budget constraint shows that the income generated by households can be used to purchase consumption goods (PC), which is one of the main purposes of household income. The other terms in the equation represent options for the allocation of income, but they do not necessarily reflect the most common or optimal choices. While households could hire more workers or acquire more money, these options are not specified in the equation as the primary or necessary uses of household income. Therefore, the best choice based on the given information is A, which represents the main purpose of household consumption.

According to the Household Nominal Budget Constraint, PC+ B+P•