Which of the Following Is NOT a Fundamental Factor Ignored

question 120

Multiple Choice

Which of the following is NOT a fundamental factor ignored by the target cash balance models?

• A) Firms have the option to borrow short-term to meet unexpected demands for cash.
• B) The costs and delays of trading securities have fallen dramatically since the advent of the Internet.
• C) Many large firms habitually use all or the majority of their available cash to purchase overnight securities.
• D) Models take into account that many firms must keep compensating balances in their deposit accounts as part of borrowing agreements with their banks.

---

Definitions:

Ford

an American multinational automaker known for revolutionizing assembly line production for automobiles.

Factor of Production

A Factor of Production is an input used in the production of goods and services, such as land, labor, capital, and entrepreneurship.

Demand

Refers to the quantity of a product or service that consumers are willing and able to purchase at various prices over a given period of time.

Supply

The total quantity of a product or service that is available to consumers at a given price level.