Consider an Economy in Which Existing Capital Is Being Used

question 42

Multiple Choice

Consider an economy in which existing capital is being used at a high degree,shortages in labour and goods markets are developing,and costs are rising.Which of the following terms best describes this stage of the business cycle?

• A)trough
• B)recovery
• C)peak
• D)recession
• E)slump

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Definitions:

Liquidity Ratios

Liquidity ratios are financial metrics used to assess a company's ability to meet its short-term obligations by comparing its liquid assets to its current liabilities.

Equity Multiplier

A financial ratio that measures a company's total assets financed by shareholders' equity, indicating the level of leverage used by the company.

Inventory Turnover Ratio

A measure of how frequently a company sells and replaces its stock of goods in a given period.

Level of Spoilage

The quantity or rate of goods that are damaged or deteriorated to the extent that they cannot be sold as first-quality merchandise.