Which of the Following Is a Normative Statement

question 3

Multiple Choice

Which of the following is a normative statement?

• A)When interest rates rise, the quantity of loanable funds demanded for new mortgages will decline.
• B)To achieve efficiency, governments should prevent monopoly in markets.
• C)Unemployment increases during a recession.
• D)When governments increase income tax rates, people work less.

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Definitions:

Residual Dividend Policy

A strategy where dividends are paid to shareholders from the residual or leftover equity only after all project capital needs are met.

Loan Indentures

Formal agreements specifying the terms of a bond or loan, including the interest rate, repayment schedule, and other conditions.

Covenants

Clauses in a contract or loan agreement that stipulate certain actions that must be taken or avoided by the borrower.

Dividend Payments

Periodic payments made by a company to its shareholders out of its profits or reserves.