Which of the Following Is Not One of the Eight

question 61

Multiple Choice

Which of the following is not one of the eight basic puzzles about financial structure?

• A) Stocks are the most important source of finance for American businesses.
• B) Issuing marketable securities is not the primary way businesses finance their operations.
• C) Indirect finance, which involves the activities of financial intermediaries, is many times more important than direct finance, in which businesses raise funds directly from lenders in financial markets.
• D) Banks are the most important source of external funds to finance businesses.

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Definitions:

Opportunity Cost

The cost of foregone alternatives, the value of the next best alternative that is given up when making a decision.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its competitors, leading to more efficient trade and production patterns.

Absolute Advantage

A situation in which a country, individual, or company can produce a particular good or service more efficiently than another party, using the same amount of resources.

Trade

Trade involves the exchange of goods, services, or both between parties, which can be at the domestic or international level, fostering economic interaction and integration.