How Do the Lessons of History Influence Decision Making

question 20

Multiple Choice

How do the lessons of history influence decision making?

• A)The lessons of history always lead to bad decisions.
• B)Decision makers carefully review history to discover the relevant lessons and apply those lessons that are most pertinent, leading to optimal decision making.
• C)Decision makers view their current problems in light of only a few historical events and are unable to conduct a broad, open-minded search for the historical lessons that apply best to any particular circumstance.
• D)History does not influence decision making.

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Definitions:

Book Value

The net value of a company's assets, subtracting its liabilities, as recorded on the balance sheet.

Liquid Assets

Assets that can be quickly converted into cash without significant loss of value, such as stocks or government bonds.

Inventory

A complete list of items such as property, goods in stock, or the contents of a building.

Non-Cash Expenses

Expenses recorded on the income statement that do not involve an actual cash flow, such as depreciation and amortization.