The household's budget constraint shows that:

Name: The household's budget constraint shows that:
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Question

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The household's budget constraint shows that the sources of funds (income) must equal the uses of funds (spending), hence answer A is correct. Profit and labor income may be sources of income but it is not stated which is the largest part. Similarly, consumption may be the largest part of spending but it is not stated which is the largest part of income, so answers B, C and D are incorrect.

The Household's Budget Constraint Shows That