Which of the Following Is True

question 264

Multiple Choice

Which of the following is true?

• A) Profit as calculated by accountants and economic profit are not necessarily equal.
• B) Profit as calculated by accountants is always smaller than economic profit.
• C) Economic profit ignores implicit costs.
• D) The Internal Revenue Service taxes the firm's economic profit but not its normal profit.
• E) The Internal Revenue Service taxes the firm's normal profit but not its economic profit.

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Definitions:

Opportunity Cost

The cost attributed to the refusal of the immediately lesser appealing option during decision-making.

Target Rate

A target interest rate set by the central bank in a country that guides monetary policy decisions, aiming to control inflation, encourage borrowing, or stabilize the economy.

Inflation

A measure of the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Money Supply

A comprehensive sum of money in an economy at any given point, covering cash, coins, and the funds maintained in demand and savings deposits.