An Open Economy

question 70

Multiple Choice

An open economy:

• A) trades only with its neighbors.
• B) trades goods but not services or assets with other countries.
• C) does not trade goods, services, or assets with other countries.
• D) trades goods and services with other countries.

---

Definitions:

Agency Conflicts

Disagreements between management and shareholders over the best interests of the corporation, often leading to decisions that benefit management at the expense of shareholders.

Income Trusts

Income trusts are investment vehicles that hold income-producing assets and distribute the income earned to the holders, commonly used in sectors like real estate and natural resources.

Free Cash Flow (FCF)

The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

Operating Expenses

These are costs associated with the day-to-day operations of a business, excluding costs of goods sold, taxes, and interest expenses.