In the Coordination Failure Model, Business Cycles Can Be Caused

question 47

Multiple Choice

In the coordination failure model, business cycles can be caused by events that are completely unrelated to economic fundamentals such as

• A) climate.
• B) business and consumer confidence.
• C) preferences, endowments and technology.
• D) countercyclical government policy.
• E) politics.

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Definitions:

Credit Sales

Sales made on terms that allow the buyer to make payments at a later date, affecting the seller's accounts receivable.

Retained Earnings

The portion of net earnings not paid out as dividends but instead retained by the company to be reinvested in its core business or to pay debt.

Net Income

The total profit of a company, after all expenses and taxes have been subtracted from total revenue.

Dividends

Payments made by a corporation to its shareholder members, usually as a distribution of profits.