Other Things Constant, If Both the Benefits and Costs of a Public-Sector

question 100

Multiple Choice

Other things constant, if both the benefits and costs of a public-sector activity are widespread among voters, the political process will generally result in the

• A) rejection of productive activities and acceptance of unproductive activities.
• B) acceptance of both productive and unproductive activities.
• C) rejection of both productive and unproductive activities.
• D) acceptance of productive activities and rejection of unproductive activities.

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Definitions:

Indirect Method

A way of reporting cash flows from operating activities by starting with net income and adjusting for non-cash transactions.

Retained Earnings

The portion of net income that is not distributed to shareholders as dividends but is retained by the company to reinvest in its core business or to pay debt.

Reported Net Income

The total profit or loss of a company after all expenses and taxes have been subtracted from total revenue, as shown on the income statement.

Direct Method

An approach to preparing the cash flow statement where actual cash inflows and outflows from operational activities are listed.