Which of the Following Statements Is Correct

question 34

Multiple Choice

Which of the following statements is correct?

• A) The sales forecast is the driver for corporate financial planning.
• B) The addition to retained earnings is the driver for corporate financial planning.
• C) The debt ratio is the driver for corporate financial planning.
• D) None of the statements are correct.

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Definitions:

Inferior Good

A type of good whose demand decreases as consumer income rises, meaning it is often replaced by more desirable goods as financial circumstances improve.

Normal Good

A type of good for which demand increases as the income of individuals rises, holding all other factors constant.

Giffen Good

A product for which demand increases as its price increases, contrary to the standard demand model, due to the interplay of income and substitution effects.

Income Effect

The change in an individual's or economy's income and how that change affects the quantity demanded of a good or service.