There Are Two Societies, a and B, That Are Alike

question 80

Multiple Choice

There are two societies, A and B, that are alike in every way but one. In society A, people have a high rate of time preference, and in society B, people have a low rate of time preference. It follows that

• A)the demand for consumption loans will probably be lower in A than B.
• B)interest rates will be lower in B than A.
• C)there will be more saving in A than B.
• D)b and c
• E)none of the above

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Definitions:

Accounts Payable

Short-term liabilities of a company representing money owed to suppliers and creditors for goods and services received but not yet paid for.

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating its short-term liquidity.

Inventory

This refers to the goods and materials that a business holds for the purpose of sale or production.

Pro Forma Statements

Financial statements based on hypothetical scenarios or projections.