What is the difference between retained earnings and dividends?
What will be an ideal response?
Retained earnings are profits kept by a firm to be used for financing future expansion. Dividends are profits paid to shareholders.
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An excess demand for money will result in all the following, except:
a. an excess supply of bonds. b. a rise in investment spending. c. a fall in bond prices. d. a fall in consumption spending. e. a fall in equilibrium real GDP.
Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80 . Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80 . Consumer surplus for the three individuals is
a. $15. b. $20. c. $35. d. $80.
In the United States the degree of individual income mobility (that is, the degree to which people move from higher to lower or lower to higher income groupings) is
a. rigid in both directions. b. flexible in both directions. c. flexible upward but rigid downward since high income perpetuates itself from generation to generation. d. flexible downward but rigid upward since most low-income people never rise significantly above the poverty level.
If a restaurant in a summer tourist area is highly profitable during the summer months but unable to cover even its variable costs during the winter months, the restaurant should
a. go out of business immediately, because no firm should continue to operate if it is losing money; doing so is contrary to the idea of profit maximization. b. go out of business as soon as the summer is over; losses should never be tolerated. c. operate during all months of the year as long as its profits during the summer exceed its losses during the winter. d. shut down during the winter, but continue operating during the summer as long as the summer profits exceed the losses (fixed costs) during the winter shutdown period.