If a Firm Has a Limited Capital Budget and Too

question 11

Multiple Choice

If a firm has a limited capital budget and too many good capital projects to fund them all, it is said to be facing the problem of

• A) profitability.
• B) wealth optimization.
• C) capital rationing.
• D) constrained capital.

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Definitions:

Price Level

An overall average price for the complete array of goods and services in the economy.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.

Market Basket

A selected set of goods and services used to track changes in prices and measure inflation over time; represents the typical consumption of a household.

Nominal GDP

The aggregate price of every ultimate good and service generated within a nation over a certain period, valued in the current monetary rates without modifications for inflationary changes.