The Concepts of Stock and Flow Are Involved in Firms

question 4

Multiple Choice

The concepts of stock and flow are involved in firms' demand for labour and for capital.Which of the following statements is correct?

• A)A firm's demand for both labour and capital is determined by the marginal value each provides to the stock of labour and capital,respectively.
• B)A firm hires a stock of labour services; and purchases a stock of physical capital,which provides a flow of services.
• C)A firm hires a flow of labour services; and purchases a stock of physical capital,which provides a flow of services.
• D)Labour and capital are both stock variables because they are providing service at any given moment in time.
• E)Labour and capital are both flow variables because their values change over time.

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Definitions:

Stock Dividends Distributable

Shares of stock that are to be issued to shareholders as a dividend, representing a distribution of additional shares rather than cash.

Common Shares

Units of ownership interest in a corporation, giving holders voting rights and a share in the company’s profits via dividends.

Dividends Declared

Dividends declared are the portion of a company's earnings that the board of directors decides to distribute to shareholders.

Shareholders' Equity

Represents the residual interest in the assets of a corporation after deducting liabilities, essentially the net worth attributable to shareholders.