By Common Definition, a Recession Occurs When

question 227

Multiple Choice

By common definition, a recession occurs when

• A) the international deficit worsens for at least two successive quarters.
• B) the government budget deficit exceeds the national debt.
• C) the inflation rate exceeds 3.5 percent.
• D) real GDP decreases for at least two successive quarters.

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Definitions:

Return On Equity

A measure of financial performance calculated by dividing net income by shareholders' equity, indicating how effectively management is using a company’s assets to create profits.

Payout Ratio

A financial metric that shows the proportion of earnings a company pays to its shareholders in the form of dividends.

Internal Growth Rate

The highest amount of growth achievable for a business without obtaining external financing, based solely on reinvestment of its earnings.

Plowback Ratio

Also known as the retention rate, it measures the proportion of earnings that a company retains and reinvests in its operations rather than paying out as dividends.