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:

Financing Activities

Transactions and events that affect the long-term liabilities and equity of a company, including issuing debt, selling stock, or paying dividends.

Issue of Shares

Refers to the process by which a corporation issues new shares of stock to raise capital, often to expand or to undertake new projects.

Direct Method

A way of reporting cash flows from operating activities by listing major classes of gross cash receipts and payments.

Indirect Method

A way of reporting cash flows from operating activities by starting with net income and adjusting for items that affected reported net income but didn't involve actual cash flows.