A firm that retains earnings does the equivalent of
A. borrowing money from the firm's shareholders.
B. lending money to the firm's shareholders.
C. decreasing the net worth of the firm's shareholders.
D. decreasing its own net worth.
Answer: A
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Differentiate between the short run and the long run
Which of the following would be most appropriate if the Federal Reserve wanted to increase the money supply in order to stimulate the economy?
A. Buy U.S. government securities. B. Force the Treasury to reduce the national debt. C. Raise the discount rate. D. Increase the reserve requirements.
Which of the following statements is FALSE?
A. The value of total income is equal in value to total output because profit is a cost of production. B. Businesses sell goods and services to households who use their income to pay for them. C. Total income is always greater than total output. D. In the circular flow model, households sell factor services to businesses in return for factor payments.
A minimum wage law is predicted to produce
A. higher unemployment among young and inexperienced workers. B. higher unemployment among all workers. C. lower unemployment among young and inexperienced workers. D. increased hiring of young and inexperienced workers.