Although Firms Do Not Segregate Funds for Various Motives of Holding

question 95

True/False

Although firms do not segregate funds for various motives of holding cash,they do consider them in setting their overall cash positions.

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Definitions:

Corrective Tax

A tax designed to encourage private decision makers to take into account the social costs that arise from a negative externality.

Allocative Efficiency

A state where resources are allocated in a way that maximizes the net benefit to society, with products being produced at a quantity where the price equals marginal cost.

Consumer Surplus

The contrast between the total payment consumers are willing and financially able to make for a good or service and the amount they truly pay.

Producer Surplus

The discrepancy between the price producers agree to sell a good for and the price they actually end up receiving.