A Company Reports the Following Information from the Statement of Cash

question 125

Multiple Choice

A company reports the following information from the statement of cash flows: Which line item provides a signal that the company may have cash flow problems?

• A)net cash provided by operating activities
• B)net income
• C)net cash provided by investing activities
• D)net cash used by financing activities

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Definitions:

Monetary Policy

The process by which a government, central bank, or monetary authority manages the money supply to achieve specific goals, such as controlling inflation, maintaining employment, and stabilizing the currency.

Short-Run Phillips Curve

A curve that illustrates a short-term trade-off between inflation and unemployment, suggesting lower unemployment can come at the cost of higher inflation.

Financial Crisis

A broad term for a situation when financial assets rapidly lose a significant part of their nominal value.

Contractionary Monetary Policy

A central banking strategy involving the increase of interest rates or reduction of the money supply to decrease inflation and slow down economic growth.