Suppose That Managers Forecasted a Large Decline in Expected Sales

question 328

Multiple Choice

Suppose that managers forecasted a large decline in expected sales and profits and so their confidence plummets. According to the __________, this forecast might start a business cycle.

• A) circular flow theory
• B) Keynesian cycle theory
• C) monetarist cycle theory
• D) new classical cycle theory

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Definitions:

Investee

The entity in which an investment is made, usually implying that the investor has significant influence but not full control over it.

Equity Method

An accounting technique used to record investments in associate companies where the investor has significant influence but not full control.

Cost Method

An accounting method that values inventory and cost of goods sold based on the purchase cost of the materials.

Common Stock

A type of equity security that represents ownership in a corporation, entitling holders to vote on corporate matters and receive dividends.