A Higher Savings Rate That Leads to an Increase in the Capital

question 320

Multiple Choice

A higher savings rate that leads to an increase in the capital stock

• A) leads to higher interest rates.
• B) is associated with a decrease in the rate of growth of the population.
• C) leads to increases in labor productivity.
• D) immediately decreases investment.

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Definitions:

Cash Cycle

The period between the purchase of inventory and the collection of accounts receivable from the sale of that inventory.

Inventory Period

The typical duration required for a firm to convert its stock into revenue.

Accounts Receivable Turnover

A financial metric that measures how often a company collects its average accounts receivable balance in a period.

Accounts Payable Turnover

A financial ratio that measures the rate at which a company pays off its suppliers by dividing total purchases by average accounts payable for the period.